Notification No. 02

SGST High Court Cases

GST - Section 16(1) & 16(3) of the IGST Act - Section 2(61) & Sec. 54 of the CGST Act - Rule 89(1) of the CGST Rules - SEZ unit, Zero Rated Supply, ISD, Refund of ITC - Petitioner seeking refund of unutilized IGST credit which was distributed by ISD for the services pertaining to the SEZ unit – denial of benefit of refund of accumulated IGST by placing reliance on the second proviso to Rule 89 of CGST Rules, 2017 – HELD – 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” - The export by the petitioner from its SEZ unit is a zero rated supply within a meaning of Section 2(23) of the IGST Act, 2017 r/w Section 16 of 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 – Proviso to Section 54(3) of the CGST Act allows refund of unutilized input tax credit of zero-rated supplies made without payment of tax - The petitioners export specifically falls under such category in proviso to Section 54(2) of the CGST Act. Proviso to Rule 89(1) is only an exception to Rule 89(1), it does not bar refund of unutilized input tax credit - Rule is not intended to deny the legitimate benefit available to an exported effecting zero rated supplies - The impugned order proceeds on the wrong assumption that application for refund in respect of supplies to a SEZ or a Special Economic Zone Developer, can be filed only by a supplier of the goods or services in terms of second proviso to Rule 89(1) of CGST Rules - there is no merit in the impugned order passed by the respondent denying the benefit of refund of unutilized input tax credit of zero rated supplies effected by the petitioner – the impugned order is set aside and writ petition is allowed

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