TaxTMI 
TaxTMI 
2020 (11) TMI 1
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.... 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 there may be a situation where the SEZ Unit gets supplies of goods/services fro....
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....lies (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 services or both to a Special Economic Zone developer or a Special Economic Zone unit. (2) Subject to the provisions of sub-section (5) of Section 17 of the Central Goods and Se....
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....ted 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 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 Special Economic Zone developer. We would like to bring to your kind attention to the rules ....
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....t 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 provisions as that the SEZ unit is not eligible to take input tax credit and on such erroneous interpretation he has rejected refund claim and such rejection is unconstitutional and bad in law and not maintainable in the eyes of law. The above interpretation of Ld. Adjudicating Officer raises the below questions :- (a) Is the SEZ unit eligible to take....
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....y 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 : Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along ....
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....m 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 refund claim - viz., (a) the refund application filed by the supplier of the SEZ unit of tax paid on supplies to SEZ; and (b) the refund application filed by the SEZ unit to claim refund of unutilized ITC. There are two ways of making supplies by the person located in Domestic Tariff Area ("DTA") to SEZ unit. Firstly, the DTA unit can make supply to SEZ unit on payment of tax. Secondly, the DTA unit can make supply to SEZ without paying tax under Letter of Sl. No. Party Name GST No. T....
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....; 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, exercises his option to claim refund of taxes paid on its outward supplies [then] it has to take declarations from the recipient that no input tax credit has been availed by the recipient of supplies. Further, there are provisions in law against any person committing offence of wrongful declaration and thus, the Revenue Department has appropriate safeguard regarding any wrongful declaration. On the basis of the provisions of law stated in foregoing paragraphs, the appellant humbly submit before the Ld. Appellate Joint Commissioner that the SEZ unit can claim the refund of unutilized Input Tax Credit. 2.3 The details of parties to whom taxes has been paid during the period for which this appeal has been filed and the appellant has claimed the input of tax....
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....ra-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 filed by the dealer, M/s. Vaachi International Pvt. Ltd., against the Tax orders of the CTO, Gajuwaka Circle, for the tax period 2017-18 under GST Act. For the impugned order suffers from misappropriation and/or incorrect appreciation of facts, and is violative of the natural justice, wrongful, biased, erroneous and bad in law. 1.1 All the grounds for appeal as prayed herein are independent of each other and is read without prejudice to each other and conjoined reading of more than one ground for appeal may be done as requested and prayed. The rejection confirmed by the adjudicating authority is against the established principles of law. In reply to objection 1 it is submitted that the application, along with the documents, filed has been primarily examined with reference to Section 54(3), Rule 89 of the APGST Act, 2017 and issued RFD-02, dated 1....
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....t 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 provisions of sub-section (10), a registered person may claim refund of any unutilized Input Tax Credit at the end of any tax period : Provided that no refund of unutilized 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 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 refu....
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....objection 2.4, it is submitted that there no remarks to offer. 2.5 In perusal of the above Sections the appellant is primarily involved in exporting dried ornamental plant, materials and candles and as per the definition of Zero-rated supply cited above the appellant falls under the definition of Zero-rated supply under category (a) of sub-section (1) of Section 16 of IGST Act. The appellant is a SEZ Unit and the supplies made to the SEZ unit are used for exporting goods. The suppliers of SEZ unit also falls under the definition of 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. In reply to objection 2.5, it is submitted that Section 54(3) and Rule 89(2)(f) of the GST Law (APGST Act., CGST Act) read as below : "Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit ....
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.... 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 not tenable. Further, the taxpayer stated that part of export turnover related to the nil rated goods. Since the taxpayer is not basically eligible for claiming the refund of unutilized tax credit against zero supply this aspect is not addressed. 2.6 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....
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.... your kind attention towards the direction of Adjudicating Authority to furnish declaration from all the vendors who made supplies to us, against which the present claim is preferred for refund of unutilized ITC to the effect that the vendors have not availed the refund of amounts paid on supplies made to the taxpayers SEZ unit. We are in process of getting those declarations from all the vendors. In reply to objection 2.7, it is submitted that 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 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." 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 tha....
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....mber 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 not tenable. 3. As per the provisions cited above, we conclude that we are eligible for the refund claimed. In reply to the objection 3, it is submitted that for the aforesaid reasons, it is respectfully submitted that the appeal is devoid of any merits and accordingly it is prayed that the Hon'ble Appellate Deputy Commissioner may be pleased to dismiss the appeal or to pass such further or other orders fit and proper in the circumstances of the case. Discussion : 13. Perused the grounds of appeal vis-a-vis the impugned orders passed by the assessing authority i.e. A.A. 14. The appellant primarily put forth that the rejection of refund claim is in violation of natural justice and against the facts of the case. The appellant also contended that, it is not correct that Refund claim filed by the appellant has been rejected so....
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....und 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." Rule 89(1) : Application for refund of tax, interest, penalty, fees or any other amount. - (1) Any person, except the persons covered under notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid on goods exported out of India, may file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner : Provided that any claim for refund relating to balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 may be made through the return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7 as the case may be : Provided further that in respect of supplies to....