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TMI Blog2020 (9) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... the CGST Act is an office of the supplier of goods and services which receives tax invoices issued under section 31 of the CGST Act towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of CGST, SGST Or IGST paid on such goods or services. Therefore, in facts of the case, it is not possible for a supplier of goods and services to file a refund application to claim the refund of the input tax credit distributed by ISD. Therefore, the stance of the department that the petitioner is not entitled to seek the refund of the ITC paid in connection with goods or services supplied to SEZ unit is not tenable. This aspect is further fortified by notification no. 28/2012 dated 20th June, 2012 which was in connection with service tax attributable to the services used in more than one unit to be distributed pro-rata on the basis of the turnover during the relevant period of the concerned unit to the sum total of the turnover of all the units and similarly, in facts of the present case also, credit of service tax is distributed to all the units by the ISD and therefore, the claim of refund made by the SEZ unit of the petitioner is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in Electronic Credit Ledger be framed to bring parity in refund under section 54 for all inverted tax structure suppliers and to remove financial hardship faced by genuine exporters like the petitioner. C. And pass such further order/orders for granting relief(s) as this Hon ble Court may deem fit and proper in the facts and circumstances of the case to meet the ends of justice. 3. The petitioner a limited company has filed this petition through its director. The petitioner which is situated in Special Economic Zone (for short SEZ ) filed an application for refund in Form GST RFD-01A with regard to the credit of Integrated Goods and Services Tax (for short IGST ) distributed by Input Service Distributor (for short ISD ) for the services pertaining to the SEZ unit for an amount of ₹ 99,05,156/- for the year 2018-2019. 4. It is the case of the petitioner that being a SEZ unit making zero rated supplies under the GST, the petitioner was not able to utilize the credit of the Input Tax Credit of IGST from its ISD and it was lying unutilized in the Electronic Credit Ledger of the petitioner. 5. The petitioner therefore, made an application to claim such refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or services or both by the supplier which are used or intended to be used in the course or furtherance of the business of the petitioner. 9. Learned advocate Mr. Mishra relied upon the provisions of section 2(61) of the Central Goods And Service Tax Act,2017 (for short CGST Act ) which defines input service distributor which means that an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of the tax paid on the said services to a supplier of taxable goods or services. It was therefore submitted that as the petitioner has received input tax credit (for short ITC ) from ISD, the petitioner is entitled to the refund being an SEZ unit. 10. Learned advocate for the petitioner also referred to the notification no.28/2012 dated 20th June, 2012 clarifying the procedure for distribution of ITC by ISD and submitted that if the credit of service tax is distributed to all the units in the manner prescribed in the said notification by an ISD, then the refund of IGST credit distributed should also be refunded to the SEZ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled to claim refund of the IGST which was distributed by ISD. 16. Learned advocate Mr. Shah also raised a preliminary objection that the petition is not maintainable as alternative remedy of filing an appeal before the appellate authority is available to the petitioner under the provisions of section 107 of the CGST Act. It was submitted that the petitioner could not have by-passed the appellate authority without any justifiable grounds and therefore, the petition is required to be rejected on this ground alone. 17. With regard to the submissions made by the petitioner on the merits of the case as to the entitlement of the refund of the input tax credit distributed by the ISD, learned advocate for the respondents referred to the following averments made in the affidavit in reply : 7. It is submitted before the Hon'ble Court that Section 2 (19) of lntegrated Goods and Services Tax Act, 2017 states that Special Economic Zone shall have the same meaning as assigned to it in clause (za) of section 2 of the Specific Economic Zones Act, 2005. Further, as per Section 2 (za) of the Special Economic Zones Act, 2005. Special Economic Zone means each Special Economic Zon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 7.3 Further, Section 16(3) of Integrated Goods and Services Tax Act, 2017 prescribed the options under which a registered person becomes eligible for claim of refund. The relevant Section states as under : 16(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 tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. From the above, it is clear that under Option 1 which is available under section 16 (3) (a) of IGST Act, a registered person may supply such goods or services or both under bond or Letter of undertaking to SEZ Developer or SEZ Co-Developer or SEZ Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through the return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7, as the case may be: Provided further that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government/Central Board of Indirect Taxes and Customs providing guidelines for processing of Input Tax Credit Refund claims filed by the units located in the Special Economic Zones, in respect of Tax Paid on inward supplies. Therefore, in absence of any circular/ Notification /relevant guidelines to process Input Tax Credit Refund claims of units located in the Special Economic Zones, the petitioner could not be granted refund and hence the petitioners claim was rightly rejected by the Deputy Commissioner. 7.9 Further, it is submitted before the Hon ble Court that in GST regime SEZ units are not required to pay any tax on supplies made to them by Domestic Tariff Area units, rather it is the supplier who is required to pay taxes if that supplier is not selling the goods under LUT and that the supplier is only eligible to claim the Refund. Therefore, Order in Original No.: 28 / Mundra / CGST / Refund / 2019-20 dated 01.08.2019 passed by Deputy Commissioner, CGST, Mundra Division, Gandhidham rejecting refund claim of ₹ 99,05,156/- of the petitioner, in terms of provisions of Section 54 of Central Goods and Services Tax Act, 2017 read with provisions of Rule 89 of the Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the CGST Act read with Rule 89 of the Central Goods and Service Tax Rules,2017 (for short CGST Rules ) only a supplier of goods or services can file an application for refund and not recipient of the services. As in the facts of the case, the petitioner is a recipient of service; the petitioner is not entitled to get the refund under the provisions of the CGST Act read with the CGST Rules. It was further pointed out that there is no circular, notification or guidelines issued by the Government or Central Board of Indirect Taxes and Customs to process the input tax credit refund claims of the units located in the SEZ and therefore, the competent authority has rightly rejected the claim of the refund made by the petitioner by passing the impugned order. 19. Having heard the learned advocates for the respective parties and having gone through the materials on record, in order to decide as to whether the petitioner is entitled to refund of ITC distributed by ISD, we may refer to the following provisions of law relevant for the purpose of deciding the controversy between the parties : Central Goods Service Tax Act,2017 2(61) Input Service Distributor means an office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon. (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or (b) 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 unutilised input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder. xxx Central Goods Service Tax Rules,2017 Rule 89: Application for Refund of Tax, Interest, Pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebited by the applicant by an amount equal to the refund so claimed. (4) In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero rated supply of services) x Net ITC Adjusted Total Turnover (A) Refund amount means the maximum refund that is admissible; (B) Net ITC means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; (C) Turnover of zero-rated supply of goods means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both; (D) Turnover of zero-rated supply of services means the value of zero ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , vide number G.S.R 1321(E), dated the 23rd October, 2017; or (b) availed the benefit of notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R 1272(E), dated the 13 th October, 2017 or notification No. 79/2017Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299(E), dated the 13th October, 2017, the refund of input tax credit, availed in respect of inputs received under the said notifications for export of goods and the input tax credit availed in respect of other inputs or input services to the extent used in making such export of goods, shall be granted. (5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula:- Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC Adjusted Total Turnover} tax payable on such inverted rated supply of goods and services. Explanation:- For the purposes of this sub-rule, the expressions (a) Net ITC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The stance of the department is that, as the writ-applicant had availed higher duty drawback and as there is no provision for accepting the refund of such higher duty drawback, the writ-applicant is not entitled to seek the refund of the IGST paid in connection with the goods exported, i.e. 'zero rated supplies'. 28. If the claim of the writ-applicant is to be rejected only on the basis of the circular issued by the Government of India dated 9th October 2018 referred to above, then we are afraid the submission canvassed on behalf of the respondents should fail as the same is not sustainable in law. 29. We are not impressed by the stance of the respondents that although the writ-applicant might have returned the differential drawback amount, yet as there is no option available in the system to consider the claim, the writapplicant is not entitled to the refund of the IGST. First, the circular upon which reliance has been placed, in our opinion, cannot be said to have any legal force. The circular cannot run contrary to the statutory rules, more particularly, Rule 96 referred to above. 30. Rule 96 is relevant for two purposes. The shipping bill that the expo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Government and of the State Government are concerned they represent merely their understanding of the statutory provisions. They are not binding upon the court. It is for the Court to declare what the particular provision of statute says and it is not for the Executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law. 7. As noted in the order of reference the correct position vis-a-vis the observations in para 11 of Dhiren Chemical s case (supra) has been stated in Kalyani s case (supra). If the submissions of learned counsel for the assessee are accepted, it would mean that there is no scope for filing an appeal. In that case, there is no question of a decision of this Court on the point being rendered. Obviously, the assessee will not file an appeal questioning the view expressed vis-avis the circular. It has to be the revenue authority who has to question that. To lay content with the circular would mean that the valuable right of challenge would be denied to him and there would be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, once circular dated 15.04.1994 stands withdrawn vide circular dated 16.04.2001, the appellant-assessee cannot claim the benefit of the withdrawn circular. 27. The controversy herein centres round the period from 1st April, 2001 to 31st March, 2002. The period in question is mostly post the circular dated 16.04.2001. As we find, the appellant-assessee has pleaded to take benefit of the circular dated 15.04.1994, which stands withdrawn and was only applicable to the notification dated 07.03.1994. It was not specifically applicable to the notification dated 21.01.2000. The fact that the third paragraph of the notification dated 21.01.2000 is identically worded to the third paragraph of the notification dated 07.03.1994 but that would not by itself justify the applicability of circular dated 15.04.1994. 28. In this context, we may note another contention that has been advanced before us. It is based upon the doctrine of contemporanea exposition. In our considered opinion, the said doctrine would not be applicable and cannot be pressed into service. Usage or practice developed under a statute is indicative of the meaning prescribed to its words by contemporary opinion. In c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the goods exported, i.e. 'zero rated supplies', with 7% simple interest from the date of the shipping bills till the date of actual refund. 21. In facts of the present case, instead of Rule 96 as was applicable in case of M/s. Amit Cotton Industries(supra), Rule 89 would be applicable which is pertaining to refund of the input tax credit. Rule 89 of the CGST Rules provides for procedure for application for refund of tax, interest, penalty, fees and prescribes that in respect of supplies to a SEZ unit, the application for refund has to be filed by the supplier of goods or services. The contention of the respondents that as the petitioner is not the supplier of the goods and services, the petitioner would not be entitled to file application for refund is not tenable because in facts of the present case, input service distributor i.e. ISD as defined under section 2(61) of the CGST Act is an office of the supplier of goods and services which receives tax invoices issued under section 31 of the CGST Act towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of CGST, SGST Or IGST paid on such goods or services. The ..... 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