Zero-rated export turnover follows invoice timing, while immaterial ITC ineligibility does not reduce sustainable refunds.
Zero-rated turnover for an ITC refund must be computed for the same relevant period as Net ITC and adjusted total turnover, using export invoices issued at or before removal of goods. Physical export remains necessary to obtain the refund, but a later shipping-bill date does not shift invoice value outside the relevant-period turnover once export is proved. A proposed reduction for inadmissible ITC does not affect the sanctioned refund where the maximum permissible refund under the formula remains higher than the amount claimed.
Issues: (i) Whether invoices issued during the refund period for export goods may be included in zero-rated turnover where the goods were actually exported after that period; (ii) Whether Net ITC for the refund formula must be reduced by inadmissible ITC where the maximum refund remains higher than the amount claimed.
Issue (i): Whether invoices issued during the refund period for export goods may be included in zero-rated turnover where the goods were actually exported after that period.
Analysis: Section 54 of the Central Goods and Services Tax Act, 2017 read with Rule 89(4) of the Central Goods and Services Tax Rules, 2017 permits refund of ITC on zero-rated supplies made without payment of tax under bond or letter of undertaking. The refund formula requires Net ITC, turnover of zero-rated supply and adjusted total turnover to relate to the same relevant period. Under Sections 12 and 31 of the Central Goods and Services Tax Act, 2017, a tax invoice for goods involving movement must be issued before or at removal, and the supply is accounted for through invoices issued in that period. Export goods supplied under bond or letter of undertaking consequently form part of zero-rated turnover in the period in which the export invoices are issued. Actual export remains a condition for grant of refund, but the later date of the shipping bill does not displace the invoice value from the relevant-period turnover once export is established.
Conclusion: Yes. The value of the four export invoices was includible in zero-rated turnover for the refund period despite the subsequent physical export of the goods. In favour of the assessee.
Issue (ii): Whether Net ITC for the refund formula must be reduced by inadmissible ITC where the maximum refund remains higher than the amount claimed.
Analysis: The alleged inadmissible ITC of Rs. 23,560 did not materially affect the entitlement because, even on the Department's proposed calculation, the maximum refund permissible under Rule 89(4) remained substantially higher than the refund claimed and sanctioned.
Conclusion: No. The alleged inadmissible ITC did not warrant reduction of the sanctioned refund. In favour of the assessee.
Final Conclusion: The refund claim remains legally sustainable on the invoice-based computation of zero-rated turnover, and the proposed ITC adjustment does not alter the admissible refund.
Ratio Decidendi: For refund under Rule 89(4), turnover of zero-rated supply of goods for the relevant period is determined by export invoices issued at or before removal of the goods, subject to proof of actual export, and not by the later date on which the goods leave India.