TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1194
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.... 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 referred to as ''the CGST Act] to petitioner SEZ ....
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....rt 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 present Writ Petition is concerned, under the scheme of the C.G.S.T. Act, an appeal is to be filed before the respective G.S....
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.... 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 in S.L.P.No.13431 of 2021. 24. It is further submitted that the order of the second respondent for the subsequent period vide Refund Orde....
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....funds 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 term 'zero rated supplies' includes exports of goods and services as well as supply of goods and services to an SEZ developer or an SEZ unit. Section 16(3) of ....
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....er 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 ITC involved in supplies received by them from suppliers. The Act facilitates eligibility for refund of unutilized input tax-credit only where the integrated tax is not paid or refund of such ....
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....ply: 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 tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may 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 Service....
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....th 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 applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person. (5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingl....
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....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 appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine. (12) Where a refund is withheld under subsection (11), the taxable person shall, notwithstanding anything contained in Section 56, be en....
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....xport 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 documentary evidences in Annexure 1 in FORM GST RFD-01, as applicable, to establish that a refund is due to the applicant, namely:- (a) the reference number of the order and a copy of the order passed by the proper officer or an appellate authority or Appellate Tribunal or court resulting in such refund or reference number of the payment of the amount specified in sub-section (6) of section 107 and sub-section (8) of section 112 claimed as refund; (b) a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on accou....
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.... 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 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 exceeds two lakh rupees: Provided that a certificate is not required to be furnished in respect of cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of subsection (8) of section 54; Explanation.- For the purposes of this rule- (i) in case of refunds referred to in clause (c) of sub-section (8) of section 54, the expression ''invoice'' means invoice conforming to the provisions contained in section 31; (ii) where the amount of tax has been recovered from the recipient, it shall be deemed that the....
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....s 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'' means the period for which the claim has been filed. (4A) In the case of supplies received on which the supplier has availed the benefit of the Government of India, Ministry of Finance, Notification No. 48/2017- Central Tax, dated the 18th October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1305 (E) dated the 18th October, 2017, refund of input tax credit, availed in respect of other inputs or input services used in making zero-rated supply of goods or services or both, shall be granted. (4B) Where the person claiming refund of unutilised input tax credit on account of zero rated supplies without payment of tax has - (a) received supplies on which the supplier has availed the benefit of the Government of India, Ministry of Finance, notification No. 40/2017- Central Tax (Rate), dat....
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....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 not have claimed any exemption as the supply was for a common service and the invoice was raised on the petitioner's Head Office at Mumbai. 42. The purpose of granting refund on zero rated supply is to ensure that the exports are competitive in the international market and such transactions are not burdened with taxes. 43. The export by the petitioner from its SEZ unit in Tirunelveli is a zero rated supply within a meaning of Section 2 (23) of the IGST Act, 2017 r/w Section 16of the IGST Act, 2017. Once, it is concluded that it was a zero rated supply, refund in terms of Section 16 (3)(a) of the IGST Act, 2017 cannot be denied. Sub Section (3) and (10) of Section 54 of the Central Goods and Services Tax Act, 2017 complement Section 16 of the IGST, 2017. 44. Section 54 of the Central Goods and Service Tax, 2017 allows the refund of tax and includes refund in case of zero rated supply made without payment of tax. Proviso to S....