2020 (11) TMI 1 - Commissioner - GST

Principles of Natural Justice - Refund of unutilized input tax - zero rated supply - refund rejected solely on the ground that as per Section 54(3)(i) read with Rule 89(2)(f) of the GST Law, the provisions for refund of unutilized input tax is available to only those taxpayer who made supplies to SEZ Unit or the Developer - Whether the rejection of refund claim by the AA, is in tune with the provisions of (CGST/SGST) APGST Act, 2017 or not? HELD THAT - On comprehending the Rule 89(1), the second proviso unambiguously 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 on the supplies received by them from non SEZ suppliers and refund would be claimed by supplier to SEZ unit/developer only - On comprehending the Rule 89(1), the second proviso unambiguously 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 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.

Issues Involved:
1. Rejection of refund claim by the Assessing Authority (AA) under Section 54 read with Rule 89 of CGST/APGST Act, 2017.
2. Eligibility of the appellant for refund of unutilized input tax credit (ITC) on zero-rated supplies made without payment of tax.
3. Interpretation of provisions related to refund claims under GST laws, particularly for SEZ units and developers.

Detailed Analysis:

1. Rejection of Refund Claim by the Assessing Authority (AA):
The appellant, M/s. Vaachi International Pvt. Ltd., contested the rejection of their refund claim amounting to ?20,97,104/- for the tax periods from July 2017 to March 2018. The AA rejected the refund claim on the grounds that the appellant was not eligible for a refund of ITC as per Section 54 read with Rule 89 of the CGST/APGST Act, 2017. The AA stated that the refund facility is available only to taxpayers who made zero-rated supplies to SEZ units/developers with payment of tax, to avoid duplicity of claims.

2. Eligibility of the Appellant for Refund of Unutilized ITC:
The appellant argued that they are eligible for the refund under Section 54(3) of the CGST Act, 2017, which allows a registered person to claim a refund of unutilized ITC at the end of any tax period for zero-rated supplies made without payment of tax. The appellant claimed that their supplies fall under the definition of zero-rated supply under Section 16(1)(b) of the IGST Act, 2017, and thus, they are entitled to the refund. They also referenced Rule 89(2)(f) of the Andhra Pradesh Goods and Services Tax Rules, 2017, which was amended to state that a declaration is required to confirm that the SEZ unit has not claimed ITC.

3. Interpretation of Provisions Related to Refund Claims Under GST Laws:
The AA's interpretation was that the refund of unutilized ITC is available only to suppliers who made supplies to SEZ units/developers with payment of tax, as per Section 54(3) and Rule 89(2)(f). The AA emphasized that the SEZ unit/developer should not claim ITC on the supplies received from non-SEZ suppliers, and the refund claim should be made by the suppliers to SEZ units/developers only. The AA rejected the appellant's contention that SEZ units can also claim refunds against zero-rated supplies made without payment of tax.

Conclusion:
The Appellate Authority upheld the rejection of the refund claim by the AA, stating that the appellant's claim was not in accordance with the provisions of the CGST/APGST Act, 2017. The authority concluded that the SEZ units/developers are not eligible to claim refunds for ITC on supplies received from non-SEZ suppliers. The appeal was dismissed, confirming the AA's decision to reject the refund claim.

Result of the Appeal:
The appeal was dismissed, and the rejection of the refund claim by the AA was confirmed. The appellant's claim for a refund of ?20,97,104/- was not entertained, and the AA's interpretation of the GST provisions was upheld.

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