SEZ Units can claim GST refunds despite Appellate Authority rejection, following Britannia Industries precedent

The Gujarat HC allowed a petition challenging rejection of refund claim by an SEZ Unit. The Appellate Authority had rejected the refund on grounds that SEZ Units cannot claim refunds under GST law, and only suppliers can claim refunds for supplies to SEZ Units/Developers. The HC held that the Appellate Authority should have followed the precedent established in Britannia Industries Limited case by the Division Bench, which remained binding as no stay was granted by the Supreme Court in the pending SLP. The HC quashed the Appellate Authority's order dated 30th November 2023, finding the facts identical to Britannia Industries Limited case.

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Issues:
Challenge to refund order, entitlement of SEZ Unit for refund of unutilized ITC, applicability of Rule 89 of CGST Rules, interpretation of SEZ Act and related notifications, appeal against refund order, consideration of previous judgments, stay on judgment pending S.L.P.

Analysis:
The petitioner, a company engaged in manufacturing chemical products in a Special Economic Zone (SEZ), filed a petition seeking writs to prohibit respondents from acting on an appeal order dated 30.11.2023 and to quash the same. The petitioner exports goods without tax payment but complies with GST procedures. The petitioner claimed a refund under Rule 89 (4) for accumulated ITC of Rs. 65,05,135 for May 2021 to March 2022. The Assistant Commissioner sanctioned the refund, but an appeal was filed by the Revenue against it, arguing SEZ Units cannot claim refunds. The Appellate Authority set aside the refund order.

The petitioner argued that the issue of SEZ Unit entitlement for refund is settled by a previous judgment by the Coordinate Bench. The petitioner contended that since there was no stay on the previous judgment, the Appellate Authority should have upheld the refund order. The Revenue did not dispute the previous judgment or the absence of a stay order on it. The High Court noted the previous judgment's observations on Rule 89 and the entitlement of SEZ Units for refunds due to input service distributors.

The High Court found that the issue was no longer open for debate due to the previous judgment's clarity on SEZ Unit refund entitlement. As there was no stay on the previous judgment, the Appellate Authority should have followed it. The High Court allowed the petition, quashing the Appellate Authority's order and disposing of the case. The judgment emphasized the importance of following established legal principles in similar cases.

In conclusion, the High Court's decision was based on the interpretation of Rule 89 of the CGST Rules and the entitlement of SEZ Units for refunds as clarified in a previous judgment. The judgment highlighted the significance of legal precedents and the lack of a stay order on the previous decision. The ruling reiterated the importance of consistency in applying legal principles across similar cases.

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