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SEZ Unit can claim Refund of ITC of GST distributed by ISD Unit

SEZ Unit can claim Refund of ITC of GST distributed by ISD Unit

The Gujarat High Court allowed Britannia Industries to petition for a claim of refund of Input Tax Credit (ITC) distributed by Input Service Distributor (ISD) under Section 54 of the CGST Act. The Petitioner, having a unit situated in Special Economic Zone (SEZ), filed an application for refund in Form GST RFD-01A with regard to the credit of Integrated Goods and Services Tax (IGST) distributed by ISD for services related to the SEZ unit. The Petitioner was making zero rated supplies under the GST and was not able to utilize the credit of Input Tax Credit of IGST from its ISD, which was lying unutilized in the Petitioner’s electronic credit ledger. Thus, the Petitioner made an application to claim such a refund. The Deputy Commissioner, Central GST issued a Show Cause Notice with a proposal to reject the claim of refund on the grounds that the Petitioner, being situated in the SEZ unit, received a zero-rated supply of goods and services and there is no provision under Section 54 of the CGST Act.

The notice also contended that there is no circular, notification or guidelines issued ever by the Board to process GST refund claim application of SEZ units. The Petitioner filed the written submissions in personal hearing, however an order was passed by the Respondent rejecting the refund. The issue raised in this case was whether the Petitioner, being an SEZ unit, can claim a refund of unutilized IGST credit lying in Electronic Credit Ledger under section 54 of the CGST Act, 2017

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