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2020 (1) TMI 890 - HC - VAT and Sales Tax100% EOU - Refund of central sales tax - amount deposited under protest - Circular No.13/8/2013-EOU dated 11th April, 2014 - HELD THAT - The learned counsel appearing for the respondents, has made a statement that the respondents shall dispose of the application of the writ applicants for refund of the amount of ₹ 18,28,199/- within a period of three months from the date of the receipt of the writ of this order. In view of such statement being made by the learned counsel appearing for the respondents, this writ application is disposed of directing the respondents to dispose of the refund application filed by the writ applicants within a period of three months from the date of the receipt of the writ of this order.
Issues Involved:
1. Entitlement to CST reimbursement for EOUs. 2. Validity of the Circular No.13/8/2013-EOU dated 11th April, 2014. 3. Denial of 'No Objection Certificate' by KASEZ Authorities. 4. Refund of the amount deposited under protest. Detailed Analysis: 1. Entitlement to CST Reimbursement for EOUs: The writ applicants, operating a 100% Export Oriented Unit (EOU), were entitled to procure duty-free raw materials and claim reimbursement of Central Sales Tax (CST) on goods manufactured in India under the Foreign Trade Policy. The applicants had been submitting applications for CST reimbursement, which were scrutinized and allowed by the Development Commissioner, Kandla Special Economic Zone (KASEZ). However, an issue was raised in 2012 by the Department of Commerce's auditors, stating that CST reimbursement was not admissible when goods were procured from another EOU, as Appendix 14-I-I of the Foreign Trade Policy referred to purchases made from the Domestic Tariff Area (DTA). 2. Validity of Circular No.13/8/2013-EOU dated 11th April, 2014: The Department of Commerce issued Circular No.13/8/2013-EOU on 11th April, 2014, directing the Development Commissioner to recover CST reimbursements already allowed to EOUs for purchases from other EOUs. The writ applicants contested the validity of this circular, citing a previous judgment (M/s. Asahi Songwon Colors Ltd.) where it was held that CST reimbursement was permissible for EOUs even when goods were purchased from other EOUs, and the circular was set aside. The court in the present case reiterated that the Foreign Trade Policy did not limit CST reimbursement to purchases from DTA units only, and the circular was not in accordance with the policy. 3. Denial of 'No Objection Certificate' by KASEZ Authorities: The writ applicants applied for exit from the EOU scheme in 2017. While the Central Excise Authority issued a 'No Objection Certificate' (NOC), the KASEZ Authorities declined, citing an outstanding amount of ?18,28,199/- related to CST reimbursement. The writ applicants argued that no such amount was payable and that the only dispute was regarding CST reimbursement, which was not as large as the amount claimed. To obtain the NOC, the writ applicants deposited the amount under protest. 4. Refund of the Amount Deposited Under Protest: The writ applicants filed an application for the refund of ?18,28,199/- deposited under protest. The KASEZ Authorities did not respond, prompting the writ applicants to file the present writ application. The court directed the respondents to dispose of the refund application within three months, considering the judgment in the case of M/s. Asahi Songwon Colors Ltd., which supported the writ applicants' claim for CST reimbursement. Conclusion: The court directed the respondents to process the refund application within three months, taking into account the precedent set by M/s. Asahi Songwon Colors Ltd., which affirmed the entitlement of EOUs to CST reimbursement for purchases from other EOUs. The circular issued by the Department of Commerce was deemed inconsistent with the Foreign Trade Policy, and the writ applicants' deposit under protest was to be refunded.
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