When FIRC Isn’t Issued, Is FIRA Enough? Navigating GST Refunds in the Real World
When FIRC Isn’t Issued, Is FIRA Enough? Navigating GST Refunds in the Real World
In practice, GST refunds often seem straightforward ,until they aren't.
Recently, I handled three export of service refund applications for different clients. All three had identical documentation except for one detail: the form of proof for foreign exchange realization.
• The first application was approved ,no questions asked.
• The second also cleared, albeit after a minor clarification.
• But for the third, the officer insisted: “Submit the FIRC issued by the bank.”
The bank didn’t issue an FIRC. They only gave a Foreign Inward Remittance Advice (FIRA) along with the transaction advice. The officer referred to Circular No. 125/44/2019-GST, which indeed mentions “FIRC/Bank Realization Certificate (BRC)” under the required documents. But does that make FIRA invalid? Is the circular itself binding?
Let’s break this down.
What is FIRC? And Why Isn’t It Always Available?
Foreign Inward Remittance Certificate (FIRC) was historically issued by banks as a standard document to confirm foreign currency receipt into India. It was commonly used for export documentation and GST refund claims. However, in light of RBI Circular AP (DIR) No. 74 dated 26 May 2016, banks were instructed to stop issuing FIRCs for export of services (except for FDI/FII-related transactions).
Instead, banks now issue Foreign Inward Remittance Advice (FIRA) or a transaction advice, essentially confirming the same remittance details, often with SWIFT references and beneficiary details.
In effect, FIRA replaced FIRC, but GST authorities haven’t updated their approach accordingly, leading to unnecessary procedural complications.
What the Law and Circular Say?
Rule 89(2)(c) of the CGST Rules requires documentary evidence of receipt of foreign exchange. While it does not mandate FIRC specifically, Circular 125/44/2019-GST includes FIRC/BRC in the standard list of refund documentation. Unfortunately, many officers still read this as an exclusive requirement, even though it’s not part of the Rules.
But is a circular binding on taxpayers?
Judicial precedents have clarified that circulars are binding on the department, but not on the assessee, especially if they go beyond the statutory provision.
And that brings us to a landmark judgment.
Gujarat High Court Ruling: A Practical Relief
Recently, the Gujarat High Court issued a taxpayer-friendly ruling stating that:
“Refund cannot be denied merely for non-submission of FIRC if the applicant has submitted a Chartered Accountant’s certificate certifying net foreign exchange realization.”
This decision rightly recognizes ground realities ,banks aren’t issuing FIRCs anymore, and exporters shouldn't suffer for procedural rigidity. It places emphasis on substance over form, and that’s how it should be.
So What Should Exporters Do?
Here’s a quick guide based on recent practice and rulings:
1. Keep transaction details ready – SWIFT advice, FIRA, and bank advice showing inward remittance.
2. Obtain a Chartered Accountant’s certificate – certifying foreign exchange realization and linking it with the invoice.
3. Highlight the Gujarat High Court ruling in your reply, especially if refund is being held due to non-submission of FIRC.
Final Thoughts
When one refund gets approved with a FIRA and another gets stuck for lack of FIRC, it’s not a compliance issue ,it’s a systemic inconsistency.
In a significant boost to service exporters, the Hon’ble Gujarat High Court has affirmed that Chartered Accountant (CA) certificates, along with bank confirmations, are valid substitutes for FIRCs when claiming GST refunds of unutilized ITC, particularly under RBI-approved netting off mechanisms. The Court emphasized that procedural prescriptions under CBIC Circular No. 125/44/2019 cannot override the substantive right to refund, thereby quashing the department’s rejection solely based on the non-availability of FIRCs. This judgment reinforces the principle that genuine foreign exchange realization, duly certified, must not be denied refund benefits due to rigid procedural expectations.
As professionals, we must bridge this gap through better documentation, referencing case laws, and educating both clients and officers. GST refund for export of services is a beneficial provision, it shouldn't become a procedural battle.
Disclaimer: This material and the information contained herein is intended for clients and other Chartered Accountants to provide updates and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.
