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Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

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GST UPDATE ON ELIGIBILITY TO CLAIM REFUND OF UNUTILISED ITC BY SEZ UNIT FOR SUPPLIES RECEIVED FROM DTA163/2020-21

GST UPDATE ON ELIGIBILITY TO CLAIM REFUND OF UNUTILISED ITC BY SEZ UNIT FOR SUPPLIES RECEIVED FROM DTA163/2020-21
We all know that supply of goods or services or both to a SEZ unit is considered as zero rated supply under section 16 of the IGST Act, 2017 and is eligible for refund benefits under section 54 of CGST Act, 2017. However, whether SEZ units exporting goods are eligible for claiming refund of accumulated input tax credit on purchases made from DTA units is the moot question which was recently discussed in the decision given by GST Appellate authority in the case of M/s VAACHI INTERNATIONAL PVT. LTD. It was held that the SEZ unit/developers are not eligible to claim any refund of accumulated input tax credit (ITC) with respect to supplies received by them from DTA units as GST Law facilitates only suppliers who made supplies to SEZ unit/developers to claim refund of tax paid. The analysis of this decision is the subject matter of consideration in our present update.
 
The appellant is SEZ unit engaged in the business of export of dried ornamental plant materials. This appeal has been filed against the tax orders passed by the assessing authority for the tax periods from July, 2017 to March, 2018 wherein the refund was rejected by stating that refund can only be claimed by supplier supplying goods to the appellant and that the SEZ unit cannot file refund of accumulated input tax credit.  However, the appellant relied upon the provisions of Section 54(3) read with rule 89(2)(f) of CGST Rules, 2017 and submitted that as per the definition of zero rated supply as mentioned in section 16 of the IGST Act 2017, the exports made by SEZ units are eligible for refund as per Section 54(3) of Central Goods and Services Tax Act, 2017. It was also contended that as per the rule 89(2)(f) (prior to amendment) 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 which 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.
 
The hon’ble appellate authority, GST, Andhra Pradesh observed that, the second proviso to Rule 89(1) stipulates that in respect of supplies to SEZ units/developers, the 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 ITC on the supplies received by them from DTA suppliers and refund would be claimed by supplier of SEZ unit/developer only. Thus, a conjoint reading of all 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 DTA suppliers. Hence, the appellate authority has upheld the order of the assessing authority for rejection of refund claim.
 
The above decision rigidly interprets the provisions of Rule 89 of CGST Rules, 2017 ignoring the fact that if SEZ unit exports goods out of India, they are eligible like any other DTA unit for claiming refund of accumulated input tax credit under section 54(3) of CGST Act, 2017. In our opinion, the refund of accumulated input tax credit to SEZ unit cannot be denied by merely relying on the provisions of Rule 89 stating that the supplier of goods or services only can claim the refund of tax paid on supplies made to SEZ because what is claimed as refund by SEZ unit is the credit accumulated on goods used for exports which is very well covered within the ambit of zero rated supplies.

This is solely for educational purpose.
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