TaxTMI 
TaxTMI 
2020 (11) TMI 1
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....-11-2019 (final) 19-12-2019 Attended 3. Sri Manish Goel, Chartered Accountant and Authorized Representative of the firm (hereinafter referred to as 'A.R.') has appeared on earlier occasion and finally on 19-12-2019 for arguing the case. Finally, the appeal was heard by the Appellate Authority. Statement of facts : 4. The appellant is an assessee on the rolls of the AA and doing the business export of Dried Ornamental Plant materials. 5. The AA recorded in his refund rejection order that on examination of appellant's refund claim under Section 54 read with Rule 89 of (CGST/SGST) GST Act, 2017, it was identified by him that the appellant is not eligible for refund of ITC, because such eligibility is available to the taxpayers who made zero rated supplies to SEZ units/Developers with payment of tax. 6. The AA further stated that the facility of getting refund of tax paid is statutorily made available to those taxpayers who made supplies to SEZ only, with payment of tax. This is to ensure that the refund of tax paid is claimed only by the suppliers to SEZ on filing of declarations from their SEZ purchasers, to avoid duplicity of the claims, as t....
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.... of tax; (ii) Where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council : Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty : Provided also that no refund of Input Tax Credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of Central Tax or claims refund of the integrated tax paid on such supplies. 1.3 Further as per Section 16 of Integrated Goods and Services Tax Act, 2017, (1) "zero rated supply" means any of the following supplies of goods or services or both, namely :- (a) Export of goods or services or both; or (b) Supply of goods or ser....
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....Zero-rated supply under category (b) of sub-section (1) of Section 16 of IGST Act. The appellant is claiming refund under "Refund of ITC on Export of Goods and Services without payment of Integrated Tax". Since the appellant is involved in zero-rated supplies made without payment of tax they are eligible for refund as per Section 54(3) of Central Goods and Services Tax Act, 2017 cited above. 1.6 Also as per Rule 89(2)(f) of Andhra Pradesh Goods and Services Tax Rules, 2017. "The application under sub-rule (1) shall be accompanied by any of the following documentary evidences in Annexure 1 in Form GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely - A declaration to the effect that the Special Economic Zone unit or the Special Economic developer has not availed the input tax credit of the tax paid by the supplier of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer." This rule was amended by Notification G.O.M.S. No. 179 (Andhra Pradesh), dated 19-2-2019 and the clause was substituted as "a declaration to the effect that the tax has not been collected from t....
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....d principles of law. 2.1 As per conjoined reading of Section 54(3) Central Goods and Services Tax Act, 2017 and Section 16 and Section 2(5) of Integrated Goods and Services Tax Act, 2017, any person doing export is eligible to claim refund of Input Tax Credit. The appellant place before the Ld. Appellate Joint Commissioner that the appellant is doing exports of goods from the SEZ unit to United States and as per the foregoing provisions, the SEZ unit is very well placed to claim the refund of unutilized Input Tax Credit ("ITC"). Further, the IT Infrastructure maintained by the Goods & Services Tax Infrastructure Network allows the SEZ unit to seamlessly file the refund application for refund of unutilized Input Tax Credit ("ITC'). 2.2 As per Rule 89(2) of Andhra Pradesh Goods and Services Tax Rules, 2017 "a declaration to the effect that the Special Economic Zone unit or the Special Economic developer has not availed the input tax credit of the tax paid by the supplier of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer." The Ld. Adjudicating Officer had interpreted the above provision....
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....e purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services - (i) Where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise. (ii) Where the services are provided by the supplier to any person on the direction of and on account of such registered person] (c) Subject to the provisions of [Section 41 or Section 43A]. the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) He has furnished the return under Section 39; Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment : ....
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....- The appellant retreat before the Learned Appellate Joint Commissioner that the Rule 89(2)(f) specifically says that declaration will be required from SEZ unit that no input tax credit ("ITC") has been claimed by the SEZ unit, We would like to place a common question that why a declaration is required? In the common parlance of law, a declaration is given by the declaring party to confirm and declare to best of his/her knowledge that the declaring party has refrained from doing the matters as declared in the said declaration. Only when the declaration is given, the declaring party limits its action and eligibility itself to do or enjoy the matters in the said declaration. In case, the declaring party was not eligible to claim ITC, then why the declaration is sought after all? In the instant case, the supplier to the SEZ unit applying the refund of tax paid on supplies to SEZ unit need to obtain declaration from the SEZ unit that the SEZ unit has not claimed any ITC in their return. Such declaration is required as to check that there is no duplicity of ref....
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....t of input tax and thus, the SEZ unit needs to provide declaration to the DTA unit that the SEZ unit hasn't claimed any credit of input tax. In the second case, since no tax has been charged on the supplies by the DTA unit to SEZ unit, there is no question of declaration of non-availment of ITC. Thus, on the basis of such declaration the department is well-positioned to check the duplicity of refund claim. We would like to further throw light on third provision to Rule 89(1) of Andhra Pradesh Goods and Services Tax Rules, 2017, which read as follows :- "Provided also that in respect of supplies regarded as deemed exports, the application may be filed by - (a) The recipient of deemed export supplies; or (b) The supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund." As per the above provision, the facility to claim refund has been given both to the recipient and the supplier of deemed export supplies. In case the supplier of deemed export supplies, e....
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.... to its suppliers (other than mentioned in Table 2.3.2) so as to enable the suppliers to claim the refund of taxes paid on supplies made to the appellant. Accordingly, the total amount sought as refund in this appeal stand reduced by Rs. 6,10,776/- (Rupees Six Lakhs Ten Thousand Seven Hundred and Seventy Six only). 2.4 As per the grounds cited above, we conclude that we are eligible for the refund claimed of Rs. 20,97,104/- (Rupees Twenty Lakhs Ninety Seven Thousand One Hundred and Four only) in this appeal as reduced by Rs. 6,10,776/- (Rupees Six Lakhs Ten Thousand Seven Hundred and Seventy Six only) which comes to Rs. 14,86,328/- (Rupees Fourteen Lakhs Eighty Six Thousand Three Hundred and Twenty Eight only) which is bona fide for the ends of justice and that the balance of convenience weighs very much in favour of the appellant. Para-wise remarks : 12. The Assistant Commissioner (ST), Gajuwaka Circle, Visakhapatnam Division has submitted Para-wise remarks on 3-12-2019 against the grounds of appeal of the appellant, and the same is extracted hereunder : I invite kind attention to the reference cited and submit the para-wise remarks for the appeal....
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....onsidered, keeping in view the principles of natural justice, and another opportunity of personal hearing was granted on 27-4-2019. Accordingly, on 27-4-2019, Shri Manish Goel, C.A, Authorized Representative (A.R) appeared before the Refund sanctioning authority and represented the case. The written contentions raised, and the arguments put forth, are verified thoroughly and found are of no avail and accordingly they are rejected as not tenable. Therefore, the refund claimed by the taxpayer i.e. Rs. 20,97,104/- (including the amount of Rs. 4,19,420/- provisionally sanctioned was rejected. 2.1 Refund claimed filed by the appellant has been rejected solely on the ground that as per Section 54(3)(i) read with Rule 89(2)(f) of the GST Law (APGST Act, CGST Act), the provisions for refund of unutilized input tax is available to only those taxpayer who made supplies to SEZ Unit or the Developer not vice versa. The relevant provisions of law are as under : In reply to objection 2.1, it is submitted that there no remarks to offer. 2.2 As per Section 54(3) of Central Goods and Services Tax Act, 2017, Subject to the prov....
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....be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of Section 54 of the Central Goods and Services Tax Act or the rules made thereunder. In reply to objection 2.3, it is submitted that there no remarks to offer. 2.4 Further Section 2(5) of the Integrated Goods and Services Tax Act, 2017 defines "export of goods" as "export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to place outside India. As per Section 2(56) of the Central Goods and Services Tax Act, 2017, "India" means the territory of India as referred to in Article 1 of the Constitution, its territorial waters, seabed and sub soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters. In reply to objection 2.4, it is submitted that there no remarks to offer. 2.5 In perusal of the above Sections the ....
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....e unit or the Special Economic Zone developer, in a case where the refund is on account of supply of goods or services or both made to a Special Economic Zone unit or a Special Economic Zone developer." As per provisions described above, the provision for refund of utilized input tax credit is made available only to those taxpayers who made supplies to SEZ unit or the developer, against LUT. Further in Rule 89(2)(f) it has been clearly prescribed that the refund application shall accompany a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer." Thus, the facility of getting refund of tax paid is statutorily made available to those taxpayers who made supplies to SEZ only, with payment of tax. This is to ensure that the refund of tax paid is claimed only by the suppliers to SEZ, on filing of declarations from their SEZ purchasers, to avoid duplicity of the claims, as t....
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.... it has been clearly prescribed that the refund application shall accompany a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer." Thus the facility of getting refund of tax paid is statutorily made available to those taxpayers who made supplies to SEZ only, with payment of tax. This is to ensure that the refund of tax paid is claimed only by the suppliers to SEZ, on filing of declarations from their [SEZ] purchasers, to avoid duplicity of the claims, as there may be a situation where the SEZ unit gets supplies of goods/services from multiple number of Vendor taxpayers, spread over different places, and it is not possible for the department to track their refund claims, against the supplies made to such SEZ unit, with payment of tax. Therefore, the contention of the taxpayer that the SEZ unit can also make refund claim against the zero-rated supplies made without payment of tax, is n....
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....tside the country and there is no bar to claim refund by the SEZ unit. Further as per the GST Rules, it is obligatory for the suppliers of SEZ unit to obtain declaration from the SEZ unit to the effect that the SEZ unit has not claimed any ITC i.e., tax paid by them on supplies made to SEZ unit. Thus, the department is well-positioned to check the duplicity of refund claim. In reply to objection 2.8, it is submitted that further in Rule 89(2)(f) it has been clearly prescribed that the refund application shall accompany a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer." Thus the facility of getting refund of tax paid is statutorily made available to those taxpayers who made supplies to SEZ only, with payment of tax. This is to ensure that the refund of tax paid is claimed only by the suppliers to SEZ, on filing of declarations from their [SEZ] purchasers, to avoid duplici....
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....to both the SEZ unit and the supplier to the SEZ unit. Issues for adjudication : 17. Whether the rejection of refund claim by the AA, is in tune with the provisions of (CGST/SGST) APGST Act, 2017 or not? Analysis : 18. Perused the grounds of appeal along with the assessment orders passed by the A.A., and after thorough verification of records, the following findings are recorded; 19. Before embarking on adjudication of this dispute, it is essential here to understand Section 54(3) read with Rule 89(1), (2)(f) of (CGST/SGST) APGST Act & Rules, 2017. Therefore, these are abstracted hereunder for better clarity. Section 54(3) : "Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period : Provided that no refund of unutilised input tax credit shall be allowed in cases other than - (i) zero-rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rat....
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....at refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the last return required to be furnished by him. Rule 89(2)(f) : The application under sub-rule (1) shall be accompanied by any of the following documentary evidences in Annexure-1 in FORM GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely :- a declaration to the effect that tax has not been collected from the Special Economic Zone unit or the Special Economic Zone developer, in a case where the refund is on account of supply of goods or services or both made to a Special Economic Zone unit or a Special Economic Zone developer." 20. On comprehending the Rule 89(1), the second proviso unambiguously stipulates that in respect of supplies to SEZ units/developers, the refund "SHALL" be claimed by suppliers of goods to the SEZ unit or developer only. Further, Rule 89(2)(f) prescribes that SEZ unit/developers shall not avail input tax credit on the supplies received by them from non SEZ suppliers and refund would be claimed by supplier to SEZ....