TaxTMI 
TaxTMI 
2022 (4) TMI 1194
X X X X Extracts X X X X
X X X X Extracts X X X X
....trict in respect of which we are concerned in the present writ petition and the other an Export Oriented Unit [EOU], at Dahej in the State of Gujarat. 4. The petitioner's SEZ Unit is engaged in the manufacture of Tyres, Flaps, and Tubes at Gangaikondan Village, Tirunelveli District. It is submitted that in addition to physical export of goods, the SEZ Unit of the petitioner also made few domestic supplies in the Domestic Tariff Area [DTA]. 5. It is the case of the petitioner that the exports made from its SEZ unit amounts to 'Zero-rated supply' within the meaning of Section 2(23) of the Integrated Goods and Services Tax Act, 2017 [hereinafter referred to as ''IGST Act''] and therefore the petitioner was entitled for refund of tax paid on input and input services under Section 16(3)(i) of the IGST Act. 6. It is submitted that certain categories of common services were purchased at the petitioner's Head Office in Mumbai and distributed the proportionate credit as an input service distributed by its head office as an input service distributor within the meaning of Section 2(61) of the Central Goods and Services Tax Act, 2017 [hereinafter referr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 13. The learned counsel for the petitioner further submits that said view was also followed by the Gujarat High Court in IPCA Laboratories Ltd. vs. Commissioner [2022-VIL-136-Guj]. The learned counsel for the petitioner fairly submits that the decision of the Gujarat High Court in Britannia Industries Limited case referred to supra has been appealed before the Hon'ble Supreme Court vide S.L.P.(C)No. 13431 of 2021 in Union of India and others vs. M/s.Britannia Industries Ltd. and the same has been admitted on 09.09.2021. 14. The learned counsel for the petitioner submits that even in the course of direct supply by a third party Unit to SEZ refund has been allowed by this Court in the case of Platinum Holdings Private Limited vs. Additional Commissionerof GST and Central Excise (Appeals-II), Assistant Commissioner of GST and Central Excise reported in 2021 (10) TMI 630 W.P.No.13284 of 2020 etc. batch, vide order dated 11.08.2021. The learned counsel for the petitioner also submits that an appeal is however pending before the Principal Seat of this Court in W.A.No.3066 of 2021. 15. The learned counsel for the petitioner submits that as far as the maintainability of the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there is no merit in the present Writ Petition. 21. Opposing the prayer, the learned Standing Counsel for the respondents submitted that the petitioner is entitled for refund for unutilized input tax credit, which was passed by the petitioner's Head Office as an input service distributor within the meaning of Section 16 (1) of the I.G.S.T. Act. It is submitted that as per Section 54(3) of I.G.S.T. Act read with Rule 89(1) of the C.G.S.T. Rules 2017, it is clear that when the supply is made to a Special Economic Zone Unit or a Special Economic Zone developer, the supplier of goods or receiver is entitled to file refund application. 22. It is, therefore, submitted that since the petitioner is a recipient of service, the benefits of refund on IGST bond on input service in terms of above provision would not inure to the petitioner. 23. The learned Standing Counsel for the respondents further submits that the refund granted vide subsequent order dated 16.08.2021 in Refund Order No.16/2021-2022 is not relevant, as it is based on the decision of the Gujarat High Court in Britannia Industries Ltd. Case [supra], which itself under challenge before the Hon'ble Supreme Court....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 30. It is submitted that refund claim made by the petitioner cannot be processed under any of the above mentioned categories or treated as eligible refunds specified under Manual Refund Processing vide Circular No.17/17/2017- GST, dated 15.11.2017 and Circular No.24/24/2017- GST, dated 21.12.2017. It is therefore submitted that the refund has been rightly rejected. 31. I have considered the arguments advanced by the learned counsel for the petitioner and the learned counsel for the respondents. I have perused the impugned order dated 07.10.2021 passed by the first respondent. I have also examined the provisions from the respective GST enactments. 32. The impugned order seeks to deny the benefit of refund of accumulated Integrated Goods and Service by placing reliance on the second proviso to Rule 89 of Central Goods and Service Tax Rules, 2017. The operative portion of the impugned order reads as under:- 7. The appellant is an SEZ unit. The above provisions of law clearly exhibit as to how supplies to an SEZ unit are to be treated and the necessary stipulations for filing of refund. A plain reading of Section 16(1) of the IGST Act, 2017 makes it clear that the ter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the SEZ. Also Rule 30(5) of the SEZ Rules, 2006 provides that in case of procurement of goods from DTA where Bill of Export has been filed under a claim of drawback, the unit or developer shall claim the same and in case the unit or the developer do not intend to claim the entitled drawback, a disclaimer to this effect shall be given to the DTA supplier for claiming such benefit. It is only to curtail the dual benefit of drawback as well as refund, the Government has consciously stipulated the conditions under proviso to Rule 89(1) making it incumbent that only the supplier of goods or services shall file the refund claim after due endorsement by the Specified Officer of the SEZ for receipt of goods in full / receipt of services with evidence, for authorized operations. 11. From the foregoing, it is observed that the contentions of the appellant seeking eligibility for refund against the zero-rated supplies received by them, is found to be untenable. Further, the case laws adduced by the appellant are not relevant to the issue in hand. A reading of the above provisions undoubtedly point towards a conclusion that SEZ unit / developers shall not claim any refund against the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tions.- In this Act, unless the context otherwise requires,-- (23) "zero-rated supply" shall have the meaning assigned to it in Section 16; 35. For a easy reference, Section 16 Chapter VII of the IGST Act, 2017 is reproduced below:- Zero Rated supply: Section 16.(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 Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply. (3)A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:-- (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of un-utilised input ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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. (4) The application shall be accompanied by - (a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and (b) such documentary or other evidence (including the documents referred to in Section 33 as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person: Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecify. (8A) The Government may disburse the refund of the State tax in such manner as may be prescribed. (9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8). (10) Where any refund is due under subsection (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may- (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; (b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. (11) Where an order giving rise to a refund is the subject matter of an appea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the - (a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone; (b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone: 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: Provided also that 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. (2) The application under sub-rule (1) shall be accompanied by any of the following....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion (3) of Section 54 where the credit has accumulated on account of the rate of tax on the inputs being higher than the rate of tax on output supplies, other than nil-rated or fully exempt supplies; (i) the reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of the finalisation of provisional assessment; (j) a statement showing the details of transactions considered as intra-State supply but which is subsequently held to be inter-State supply; (k) a statement showing the details of the amount of claim on account of excess payment of tax; (l) a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees: Provided that a declaration is not required to be furnished in respect of the cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54; (m) a Certificate in Annexure 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advance received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (E) ''Adjusted Total Turnover'' means the sum total of the value of- (a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of services; and (b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply of services, excluding- (i) the value of exempt supplies other than zero-rated supplies; and (ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or subrule (4B) or both, if any, during the relevant period. (F) ''Relevant period'....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s subrule, the expressions - (a) Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rule (4A) or (4B) or both; and (b) ''Adjusted Total turnover'' and ''relevant period'' shall have the same meaning as assigned to them in sub-rule (4)'' 39. On the supply of common service to the petitioner's Head office, the supplier of such common services could not have claimed any refund either under 16(3)(b) of the IGST Act, 2017 as such a supply did not qualify as a "zero rated supply" within the meaning of Section 2(23) of the IGST Act, 2017. 40. Therefore, there is no question of the supplier claiming refund under Section 16(3)(a) or (b) of the IGST Act, 2017. The suppliers of these input service also could not haveavailed refund under Section 54 (3) of the Central Goods and Service Tax Act, 2017 r/w Rule 89 of Central Goods and Service Tax Rules, 2017. 41. To avail such refund to the supplier should also have filed a declaration to that effect, incident of tax has not been passed on to the SEZ. The supplier also could ....