TaxTMI 
TaxTMI 
2025 (1) TMI 1084
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.... of Input Tax Credit (ITC) for compensation cess leviable under Section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 (for short "the Compensation Cess Act"). 3. By the order impugned in the present Writ Petition, Respondent No. 2, by the impugned order in Appeal dated 23rd February 2022, upheld the rejection of the refund passed by Respondent No. 3 vide his order dated 11th August 2021. 4. The brief facts of the present case are that the Petitioner is a partnership firm registered under the GST Law and having its principal place of business within the jurisdiction of Mumbai in the State of Maharashtra. It is inter alia engaged in the business of exporting beverages out of India. The Petitioner had purchased the s....
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....unt 10,72,304 10,72,304 9,06,854 30,51,462 7. Respondent No. 3 thereafter issued acknowledgment of the refund in RFD-02 on 13th July 2021. On the said refund application, Respondent No. 3 issued a show cause notice in RFD-08 calling upon the Petitioner to show cause as to why the refund of Rs. 9,06,854/- (under the head of C0mpensation Cess) should not be disallowed. To this show cause notice, the Petitioner filed a detailed reply and specifically pointed out Circular No. 1/1/2017 dated 26th July 2017 issued by the Government of India, Ministry of Finance, Department of Revenue (Tax Research Unit). Before Respondent No. 3, the Petitioner submitted that the Compensation Cess had to be given the same treatment as tax under any ....
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....n, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includesa) the integrated goods and services tax charged on import of goods; b) The tax payable under the provisions of sub-sections (3) and (4) of section 9; c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include ....
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....g to goods exported [on similar lines as refund of input taxes under section 16 (3) (a) of the IGST, 2017]." (emphasis supplied) 12. This has been further made clear by a subsequent circular of the Central Board of Indirect Taxes and Customs dated 18th November 2019. Once again, by this Circular, in paragraph 42, it is made clear that a registered person making a zero rated supply under LUT may claim refund of unutilized credit including that of Compensation Cess. Of course, it is needless to state that the Input Tax Credit taken for Compensation Cess can be allowed for utilization of Input Tax Credit of Cess only for payment of Cess on the outward supplies, and not any other tax. Paragraph 42 of the Circular dated 18th November....
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.... the proviso to section 11 (2) of the Cess Act, which allows the utilization of the input tax credit of cess, only for the payment of cess on the outward supplies." (emphasis supplied) 13. From these Circulars, it is absolutely clear that the Petitioner is entitled to a refund even of Compensation Cess. These Circulars have been glossed over by the Additional Commissioner in the impugned order. The Additional Commissioner (Respondent No. 2), after setting out the relevant portion of the Circular dated 26th July 2017 merely states that there is no provision for refund of Input Tax Credit other than those defined and included under Section 2 (62) and Section 2 (63) of the CGST Act, which does not include Compensation Cess. We are ....