Refund of unutilized IGST credit through Input Service Distributor upheld for a Special Economic Zone unit making zero-rated supplies.

A Special Economic Zone unit making zero-rated supplies is entitled to refund of unutilized IGST credit under the CGST refund provisions where the credit was distributed through an Input Service Distributor. The refund claim cannot be rejected merely because the direct supplier is not the claimant, since an Input Service Distributor functions as an office of the supplier and distributes credit for input services. The Court applied its earlier ruling on the same refund issue and held that the governing ratio remained unchanged, so the contrary appellate order could not stand.

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Issues: Whether a Special Economic Zone unit was entitled to refund of unutilized IGST credit lying in the electronic credit ledger where the credit arose from input services distributed through an Input Service Distributor.

Analysis: The refund claim was examined in the light of the statutory refund scheme under the Central Goods and Services Tax Act, 2017 and the CGST Rules, 2017. The Court held that an Input Service Distributor is an office of the supplier which receives tax invoices for input services and distributes credit, and therefore the refund claim of the SEZ unit could not be denied merely because the direct supplier was not the claimant. The Court treated its earlier decision on the same refund issue as squarely applicable and noted that the governing ratio remained undisturbed.

Conclusion: The SEZ unit was entitled to refund of the unutilized IGST credit and the contrary appellate order could not stand.

Ratio Decidendi: Where input tax credit is distributed through an Input Service Distributor and no other supplier can claim the refund, an SEZ unit making zero-rated supplies is entitled to refund of the unutilized credit under the refund provisions.

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