TMI Blog2020 (11) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... refund SHALL be claimed by suppliers of goods to the SEZ unit or developer only. Further, Rule 89(2)(f) prescribes that SEZ unit/developers shall not avail input tax credit on the supplies received by them from non SEZ suppliers and refund would be claimed by supplier to SEZ unit/developer only The refund eligibility claim by the appellant is not in tune with the provisions of Act and the AA has precisely rejected such refund claim duly observing the provisions of the Act - the levy of refund reject by the assessing authority, are confirmed - Appeal dismissed - decided against appellant. - APL1900232 - Order No. 4990/2020 - Dated:- 10-2-2020 - Smt. P. Vaishnavi, Joint Commissioner (ST) Appellate Authority (ST) ORDER This is an appeal filed by M/s. Vaachi International Pvt. Ltd., Trading Unit No. 3/8, VSEZ, Duvvada, Visakhapatnam (hereinafter referred to as Appellant ) against the tax orders passed by the Assistant Commissioner (ST), Gajuwaka Circle, Visakhapatnam Division (hereinafter referred to as Assessing Authority /for short A.A. ) for the tax periods from July, 2017 to March, 2018 under CGST/APGST Act, 2017 in GSTIN : 37AABCV5897L1ZH vide his orders dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Acts, dated 2-5-2019, by rejecting total refund amount of ₹ 20,97,104/-. 9. Aggrieved by the above refund rejection orders passed by the assessing authority, the appellant has preferred the present appeal and disputed the rejection of refund of ₹ 20,97,104/-. Grounds of Appeal : 10. The grounds of appeal filed by appellant in the appeal are extracted hereunder; 1. For the impugned order suffers from mis-appropriation 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 is 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. 1.1 Refund claimed filed by the appellant has been rejected solely on the ground that as per Section 54(3)(i) read with Rule 89(2)(f) of the GST Law (APGST Act, CGST Act), the provisions for refund of unutilized input tax is available to only those taxpayer who made supplies to SEZ Unit or th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. 1.4 Further Section 2(5) of the Integrated Goods and Services Tax Act, 2017 defines export of goods as export of goods with its grammatical variations and cognate expressions, means taking goods out of India to place outside India. As per Section 2(56) of the Central Goods and Services Tax Act, 2017, India means the territory of India as referred to in Article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters. 1.5 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for the refund claimed, since they exported the goods, outside the country and there is no bar to claim refund by the SEZ unit. Further as per the GST Rules, it is obligatory for the suppliers of SEZ unit to obtain declaration from the SEZ unit to the effect that the SEZ unit has not claimed any ITC i.e., tax paid by them on supplies made to SEZ unit. Thus, the department is well-positioned to check the duplicity of refund claim. 2. As per the provisions cited above, we conclude that we are eligible for the refund claimed. Additional grounds of appeal : 11. At the time of hearing on 19-12-2019, the A.R. has submitted the additional grounds in support of his contentions, which are extracted hereunder; 1. 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. 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. 2. The refund rejected by the adjudicating authority is against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. Further sub-section (2) of said Section 16 read as :- Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless :- (a) He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed; (b) He has received the goods or services or both. [Explanation: - For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services - (i) Where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise. (ii) Wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... twork allows the SEZ unit to seamlessly claim the input of tax paid on procurement or availment of supplies from the Domestic Tariff Area. (b) The Second aspect - Is the declaration mentioned in Rule 89(2)(f) of Andhra Pradesh Goods and Services Tax Rules, 2017 restricts the ab initio eligibility of SEZ unit to claim input tax credit? - has been dealt as follows :- The appellant retreat before the Learned Appellate Joint Commissioner that the Rule 89(2)(f) specifically says that declaration will be required from SEZ unit that no input tax credit ( ITC ) has been claimed by the SEZ unit, We would like to place a common question that why a declaration is required? In the common parlance of law, a declaration is given by the declaring party to confirm and declare to best of his/her knowledge that the declaring party has refrained from 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 inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C.H. Robinson Worldwide Freight India Pvt. Ltd. 36AACCC9617L1ZB 23,039.77 14 Lurthmatha Handicrafts (Sea Shell s) 37AFMPL2491P1ZN 19,591.00 15 Omega Shipping Agencies Pvt. Ltd. 37AAACO3745R3ZS 12,276.94 16 Sai Bhaskara Packaging 37AAHPE1615L1ZT 12,096.00 17 CMA CGM Agencies India Pvt. Ltd. 37AABCC9048G1ZK 11,838.52 18 Sri Vinayaka Paper Packaging 37AIXPS007C3ZZ 10,980.24 19 Allwin Shipping Services 33AAGFA6004N1ZM 10,444.98 20 Sai Chemicals 37ACMPD5473C1Z0 8,550.00 Total 2,171,760.24 Undertaking. In the first case, since tax amount is mentioned in the invoice, the SEZ unit can claim input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isis, triggered by the challenging global macro-economic environment, being currently faced by the appellant and the rejection of our refund application by the Ld. Adjudicating Officer leading to blockage of our substantial working capital in taxes, for which refund has been filed, the appellant forego the following refund claims of ₹ 6,10,776/- (Rupees Six Lakhs Ten Thousand Seven Hundred and Seventy Six only) (as the following parties have filed the refund application with or claimed the GST Refund from their jurisdiction officer based on the declaration and endorsement of specified officer provided to such suppliers by the appellant after the refund was rejected by the Ld. Adjudicating Officer) :- Table 2.3.2 : Details of Suppliers claiming the refund Sl. No. of Table 2.3.1 Party Name GST No. Total Taxes Paid 1 Sai Ganapathi Traders 37BQMPK5783R1ZN 4,02,081.20 6 Vaachi International Pvt. Ltd., 19AABCV5897L1ZF 1,36,872.00 9 Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed has been primarily examined with reference to Section 54(3), Rule 89 of the APGST Act, 2017 and issued RFD-02, dated 19-3-2019 (acknowledgment). The refund claim has been further examined, and it was observed that the taxpayer was not eligible to claim refund of ITC on Export of Goods and Services without payment of IGST, since such provision is available to the taxpayers who made zero-rated supplies to SEZ unit/developer with payment of tax under Section 54 read with Rule 89(2) only. Accordingly, it was sought to issue Show-cause Notice (RFD-08) from RFD-02 stage (acknowledgment), on the proposed rejection of the refund claim. However, issued RFD-04, dated 30-3-2019 wherein provisional refund to the extent of 20%, amounting to ₹ 46,205/- (CGST); 46,205/- (SGST); 3,27,010/- (IGST); has been granted to the taxpayer on the APTIS Module, since there was no provision to issue RFD-08 (show cause notice) from RFD-02 on APTIS. Subsequently, Show Cause Notice (SCN) in RFD-08, dated 3-4-2019 was issued to the taxpayer, proposing rejection of the entire refund claim, including the 20% provisional refund granted vide Form RFD-04, dated 30-3-2019, amounting to ₹ 4,19,420/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, 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. In reply to objection 2.2, it is submitted that there no remarks to offer. 2.3 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 :- (c) Export of goods or services or both; or (d) 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 unutilized input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y tax period : Provided that no refund of unutilised 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 refund of the integrated tax paid on such supplies. 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 tax has not been collected from the Special Economic Zone unit or the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomic 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 prior to amendment wherein it was mentioned that suppliers to SEZ need to give declaration from the SEZ unit that the SEZ unit has not claimed input tax credit and this sub rule makes it clear that the SEZ unit can claim input tax credit and the option to claim refund of tax is open to both the SEZ unit and the supplier to the SEZ unit haven t claimed any input tax credit. In reply to objection 2.6 it is submitted that 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 that the refund application shall accompany a declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer. Thus the facility of getting refund of tax paid is statutorily made available to those tax payers 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 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. 2.8 The appellant is eligible for the refund claimed, since they exported the goods, outside the country and there is no bar to claim refund by the SEZ unit. Further as per the GST Rules, it is obligatory for the suppliers of SEZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) read with Rule 89(2)(f) of the GST Law (APGST Act, CGST Act), the provisions for refund of unutilized input tax is available to only those taxpayer who made supplies to SEZ Unit or the Developer. 15. The appellant also put forth Section 16, professing that their supplies are definitely falls under zero-rated supply under Section 16(1)(b). The appellant also advanced that they have claimed refund under Refund of TTC 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. 16. The appellant also pointed out that prior to amendment wherein it was mentioned that suppliers to SEZ need to give declaration from the SEZ unit that the SEZ unit has not claimed input tax credit and this sub-rule makes it clear that the SEZ unit can claim input tax credit and the option to claim refund of tax is open to both the SEZ unit and the supplier to the SEZ unit. Issues for adjudication : 17. Whether the rejection of refund claim by the AA, is in tune with the provisions of (CGST/SGST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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. 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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