(2026) 1 GSTAT E- Journal 99 (Kolkata)RefundDecision: In Favour of Assessee
GSTAT on Bill-to-Ship-to Exports: Toll Receipts Not Mandatory for ITC Refund and Second-Line Supplier Defaults Inapplicable
The GSTAT Kolkata Bench held that under the Bill-to-Ship-to model (Section 10(1)(b) IGST Act), goods need not originate from the supplier's registered address, and toll receipts are not mandatory to prove transit. Cancellation of upstream second-line suppliers cannot defeat an exporter's refund under Section 54(3).
Case Name / Parties
Anil Kumar Singh v. Director, Agarwala’s Bitumex Private Limited
Appeal Number
APL/10/KLK/2026 AND APL/14/KLK/2026
Tribunal Bench
Kolkata Bench
Date of Judgment / Order
20/08/2026
Coram
Shri Sunil Kumar Singh, Member (Judicial) • Shri Bijoy Kumar Kar, Member (Technical)
For Appellant: Shri Rakesh Kumar, Superintendent, CGST, Authorised Representative
For Respondent: Shri Gaurav Sharma, Chartered Accountant
Facts of the Case
The Respondent is an exporter of bitumen and steel rods from Siliguri, West Bengal. It filed refund applications under Section 54(3) of the CGST Act for accumulated unutilized ITC of ₹11,41,828/- (January 2025) and ₹27,65,697/- (February 2025) arising from zero-rated export supplies. The original adjudicating authority rejected both refund claims alleging that: (1) although the direct supplier M/s K.S. Metals was based in Kolkata, vehicle toll data showed movement solely within Bihar and UP with no West Bengal toll plaza crossed; and (2) two upstream second-line suppliers who supplied K.S. Metals had their GST registrations cancelled ab initio. The First Appellate Authority allowed the exporter's appeals and sanctioned the refunds. The Revenue appealed to GSTAT, attempting also to raise new grounds regarding petroleum licensing (PESO) and intelligence inquiries.
Issues Before GSTAT
- 1Whether under the Bill-to-Ship-to model (Section 10(1)(b) of the IGST Act), goods must necessarily originate from the registered place of business of the supplier.
- 2Whether toll plaza receipts are mandatory documents to establish actual physical movement of goods for availing ITC or obtaining an export refund under Section 54(3).
- 3Whether refund of accumulated ITC can be denied to a bona fide exporter because upstream second-line suppliers had ab initio cancelled registrations, while the direct supplier's registration remains active and undisputed.
- 4Whether the Revenue can introduce entirely new grounds and unvetted investigative allegations for the first time before the GSTAT without compliance with Rule 45(1) of GSTAT Procedure Rules, 2025 and Rule 112(1) of the CGST Rules.
Relevant Statutory Provisions & Rules
Statutory Sections
Section 10(1)(b) of IGST Act, 2017Section 16 of CGST Act, 2017Section 16(2) of CGST Act, 2017Section 16(2)(a)–(d) of CGST Act, 2017Section 54 of CGST Act, 2017Section 54(3) of CGST Act, 2017Section 107 of CGST Act, 2017Section 112 of CGST Act, 2017
GST Rules
Rule 45(1) of GSTAT (Procedure) Rules, 2025Rule 112(1) of CGST Rules, 2017
Contentions of the Parties
Appellant / Taxpayer Contentions
- •No toll plaza in West Bengal was crossed by the 14 intercepted vehicles; movement was recorded only in Bihar and UP, indicating a false origin declaration.
- •The direct supplier K.S. Metals procured goods from suppliers whose registrations were cancelled ab initio, meaning no real goods existed to generate valid ITC under Section 16(2)(b).
- •Possession of invoices and e-way bills is insufficient; actual taxable supply must be established.
- •Customs Preventive and Land Customs Station (LCS) Jogbani raised intelligence concerns regarding the exporter's supply chain.
Respondent / Revenue Contentions
- •Under Section 10(1)(b) of the IGST Act, the Bill-to-Ship-to arrangement expressly permits goods to be delivered directly to the LCS/port at Jogbani on the buyer's instructions to minimize operational costs.
- •The Revenue itself admitted that the goods were physically received at the Land Customs Station, verified, and exported out of India; DGFT Bank Realization Statements (BRC) and Export General Manifests (EGM) were on record.
- •GST law nowhere prescribes toll plaza receipts as a condition for claiming ITC or export refund, as affirmed by the Allahabad High Court in Raghuvansh Agro Farms.
- •The respondent purchased from K.S. Metals, whose registration was active; a bona fide purchaser is not required to conduct forensic investigations into second-line upstream suppliers.
- •Rule 45(1) of GSTAT Procedure Rules, 2025 and Rule 112(1) of CGST Rules bar Revenue from raising new allegations not contained in the SCN.
Findings of GSTAT
Under Section 10(1)(b) of the IGST Act, the Bill-to-Ship-to model is a recognized statutory trade practice. There is no requirement in law that goods must physically originate from the registered office of the bill-to supplier. Delivery directly to the port/LCS on the exporter's instruction is completely valid.
Toll plaza receipts are not mandatory documents under the GST Act or Rules to establish movement of goods. Where tax invoices, E-way bills, bilty, shipping bills, EGM details, transporter certificates, and bank payment statements are undisputed, physical movement and export are legally established. Followed Allahabad High Court in Raghuvansh Agro Farms Ltd.
A purchasing dealer is not responsible for irregularities committed by second-line upstream suppliers with whom it has no privity of contract, provided its direct supplier holds a valid and active registration and Section 16(2)(a)–(d) conditions are met.
Revenue cannot travel beyond the four corners of the SCN. Under Rule 45(1) of GSTAT (Procedure) Rules, 2025 and Rule 112(1) of CGST Rules, 2017, additional evidence and fresh grounds cannot be introduced at the second appellate stage without exceptional justification and formal application.
Ratio Decidendi
Key Legal Principle
“In a Bill-to-Ship-to transaction under Section 10(1)(b) of the IGST Act, toll plaza receipts are not mandatory to prove physical movement where export is substantiated by shipping bills, EGM, and bank realization. An exporter cannot be denied Section 54(3) ITC refunds due to registration cancellations of upstream second-line suppliers with whom it has no privity of contract.”
Final Decision & Relief Granted
Outcome: The appeals filed by the Revenue were dismissed. The First Appellate Authority's order sanctioning refund of accumulated unutilized ITC of ₹11,41,828/- and ₹27,65,697/- was upheld in full.
Relief Granted: Dismissal of Revenue appeals; full sanction and release of zero-rated export accumulated ITC refunds under Section 54(3).
Operative relief was verified against the Tribunal's order and accurately summarized without altering its legal effect.
Practical Implications for Taxpayers
- Exporters operating on Bill-to-Ship-to logistics to land customs stations or seaports should ensure their E-way bills clearly record the Ship-to address as the customs station.
- Do not let refund sanctioning officers reject zero-rated claims for want of FASTag or toll plaza slips: cite this judgment and Raghuvansh Agro Farms to establish that toll receipts are not statutory documents.
- Perform due diligence on immediate (Tier-1) suppliers and retain portal registration verification records; you are not required to trace Tier-2 or Tier-3 supply vendors.
Practical Takeaways for Tax Professionals
- Highlight export confirmation: once the customs authority has issued an EGM and DGFT has received the BRC, Revenue cannot dispute the physical existence of the exported goods.
- Enforce Rule 45(1) of GSTAT Procedure Rules, 2025 against Revenue representatives who attempt to bring new investigative letters or intelligence reports into Tribunal hearings without having pleaded them in the SCN.
- Ensure client files include the full export documentation chain: tax invoice, E-way bill, bilty, shipping bill, EGM, and inward bank realization certificate.
SKM
Editorial Commentary
SKM Laws Professional Analysis
This decision from the Kolkata Bench is a vital victory for exporters engaged in multi-state procurement. Field formations frequently attempt to defeat zero-rated refund claims by demanding FASTag toll records or alleging that upstream vendors in other states had registration defects. GSTAT decisively anchored the law to Section 10(1)(b) and Section 16(2): the Bill-to-Ship-to model was specifically designed by Parliament to facilitate streamlined transit directly to export gateways. Requiring exporters to produce toll plaza receipts or police their vendors' vendors imposes an impossible burden unauthorized by the statute. Furthermore, the Tribunal's strict enforcement of Rule 45(1) ensures that Revenue cannot spring ambush arguments at the second appellate stage.
Related Cases & Precedents
(2026) 1 GSTAT E-Journal 75
Holding that procedural documentation slips cannot defeat genuine transactions.
(2026) 1 GSTAT E-Journal 15
Detailed examination of Section 54 refund principles.
Related GST Tools & Utilities
Source Citation & Forensic References:
Official Citation: (2026) 1 GSTAT E- Journal 99 (Kolkata)
Source Publication: GSTAT E-Journal, Volume I (Till 31.08.2026), Published by Goods and Services Tax Appellate Tribunal
Journal Pages: 99-109
Legal Information Disclaimer
This case law analysis is published strictly for informational, educational, and research purposes. It does not constitute legal, tax, or professional advice. The ratio decidendi and commentary reflect professional editorial interpretations of the Goods and Services Tax Appellate Tribunal's reported judgment. Readers must refer to the full certified order of the Tribunal before initiating or defending litigation.