2022 (2) TMI 947 - HC - GST

Refund of ITC - inward supply charged by the supplier - Input Tax Credit is distributed by the input service distributor - HELD THAT - The writ applicant received the aforesaid Input Tax Credit of the integrated tax from its ISD and ITC inward supply charged by the supplier as is permissible under the law. It is the case of the writ applicant that being a SEZ Unit making Zero Rated Supplies under the GST the writ applicant has not been utilized the credit and the same is lying unutilized in the Electronic Credit Ledger. The writ applicant filed the refund application in Form GST RFD 01A on 3rd April 2019. No sooner the writ applicant filed the above refund application a show cause notice in Form GST RFD 08 dated 17th May 2019 came to be issued calling upon the writ applicant to show cause. The Assistant Commissioner thereafter proceeded to pass an order in Form GST RFD 06 dated 27th May 2019 rejecting the refund claim of the writ applicant of Rs. 21, 66, 867/- under Section 54 of the CGST Act 2017 - The writ applicant thereafter preferred an appeal before the appellate authority i.e. the Joint Commissioner (appeals). The Joint Commissioner dismissed the appeal. The issue raised in the present writ application is no longer res integra in view of the judgement and order passed by this Court dated 11th March 2020 in the case of M/S. BRITANNIA INDUSTRIES LIMITED VERSUS UNION OF INDIA 2020 (9) TMI 294 - GUJARAT HIGH COURT where it was held that the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit is not tenable. The writ applicant could be said to be entitled to claim the refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as Input Tax Credit is distributed by the input service distributor - respondents are directed to process claim of refund made by the writ applicant for the unutilized IGST Credit lying in the Electronic Credit Ledger under Section 54 of the CGST Act 2017 - Application allowed.

Summary

Issues:
Refund of Input Tax Credit (ITC) on inward supply, Utilization of IGST credit distributed by ISD, Refusal of refund application under Section 54 of the CGST Act, 2017

Analysis:
The writ applicant, a pharmaceutical company operating in a Special Economic Zone, sought a refund of accumulated Input Tax Credit (ITC) amounting to Rs. 21,66,887. The ITC comprised credits from ISD and inward supplies for export. The company claimed that, as a SEZ unit making Zero Rated Supplies under GST, it had not utilized the credit, which remained unutilized in the Electronic Credit Ledger. Following a refund application, a show cause notice was issued questioning the eligibility for refund under Section 54 of the CGST Act, stating that no circular or guidelines existed for SEZ units' GST refund claims. Subsequently, the Assistant Commissioner rejected the refund claim, leading to an unsuccessful appeal before the Joint Commissioner.

In the present writ application, the issue raised was considered settled based on a previous judgment dated 11th March 2020 in the case of M/s. Britannia Industries Limited vs. Union of India. The court noted that the writ applicant was entitled to claim the refund of the IGST credit in the Electronic Credit Ledger, as no specific supplier could claim the refund under the CGST Act and Rules due to the distribution of Input Tax Credit by the input service distributor. Consequently, the court allowed the writ application, quashed the impugned order, and directed the respondents to process the refund claim for the unutilized IGST Credit within three weeks from the date of the order.

In conclusion, the judgment addressed the issue of refunding Input Tax Credit on inward supply and the utilization of IGST credit distributed by ISD, overturning the refusal of the refund application under Section 54 of the CGST Act, 2017. The court's decision was based on the settled legal position established in previous judgments, emphasizing the entitlement of the writ applicant to claim the refund of unutilized IGST Credit in the Electronic Credit Ledger.