SEZ units are entitled to claim refunds of unutilized ITC under Rule 89 of the CGST Rules, irrespective of pending appeals against related judgments.

ORDER :

NIRAL R. MEHTA, J.

1. By way of this petition under Articles 226 and 227 of the Constitution of India, the petitioner has approached this Court for the following prayers:

“17(A) That Your Lordships may be pleased to issue a writ of prohibition or any other appropriate writ, order or direction completely and permanently prohibiting the respondents, their servants and agents from taking any action against the petitioner pursuant to order in appeal No.VAD-CGST-002- APP-ADC-182-2023-24 dated 30.11.2023 (Annexure-”E”) passed by the Additional Commissioner (Appeals), CGST & Central Excise, Vadodara, the 2nd respondent herein;

(B) That Your Lordships may be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing and setting aside order in appeal No.VAD-CGST- 002-APP-ADC-182-2023-24 dated 30.11.2023 (Annexure - “E”) passed by the Additional Commissioner (Appeals), CGST & Central Excise, Vadodara, the 2nd respondent herein;

(C) Pending hearing and final disposal of the present petition, Your Lordships may be pleased to restrain the respondents, their servants and agents from implementing order in appeal No.VAD-CGST-002-APP-ADC-182-2023-24 dated 30.11.2024 and from taking any action against the petitioner pursuant to this order in appeal No.VAD-CGST-002-APP-ADC-182-2023- 24 dated 30.11.2023;

(D) An ex-parte ad-interim relief in terms of para 17(C) above may kindly be granted;”

2. The brief facts of the case can be stated as under:

2.1. The petitioner is a company, inter alia, engaged in the business of manufacture of chemical products and has a Special Economic Zone at Dahej SEZ. A Letter of Permission for being operated as SEZ Unit is issued in favour of the petitioner on 5th August 2008. The petitioner is also a registered person under the provisions of the CGST, IGST Act and the Rules framed thereunder by way of GST Registration No.GSTIN24AANCM0056E2ZQ.

2.2. The petitioner being a ZEZ Unit, the goods manufactured are exported to foreign countries without payment of tax. However, the petitioner complied with the GST procedure including maintenance of statutory registers like Electronic Credit ledger, Electronic Cash Ledger, GSTR-3B returns etc. and also reported to the jurisdictional GST officers all the details of the business transactions by furnishing statutory returns.

2.3. As per the Special Economic Zones Act, 2005 and schemes framed thereunder vide various Notifications like Notification Nos.15/2017-Integrated Tax (Rate) dated 30th June 2017 and 18/2017-Integrated Tax (Rate), the goods and services brought in an SEZ Unit (and also those procured by an SEZ Developer) for authorized operations are exempt from payment of GST. However, the said exemption is subject to fulfillment of the conditions laid down under the Notifications. The petitioner has also been procuring and receiving various input supplies on payment of appropriate tax thereon with the statutory documents like tax invoice for such supplies. In these cases, Input Tax Credit of tax paid on such supplies is taken by the petitioner in the Electronic Credit Ledger and such transactions are also reported to the jurisdictional GST officers while filing monthly returns. The Input Tax Credit remains accumulated in the credit ledger because the outward supplies of SEZ Units are ordinarily made without payment of tax under LUT or a bond and thus, the Input Tax Credit of input supplies is not utilized for discharging tax on the outward supplies.

2.4. The petitioner, therefore, lodged online claim for refund of Rs.65,05,135/- under Rule 89(4) of the Rules and the category of refund was shown in the claim as “Export of goods / services without payment of tax (accumulated ITC)”. The said claim was for the tax period of May 2021 to March 2022.

2.5. The Assistant Commissioner issued a notice in Form GST RFD 08 dated 17th October 2022 for reducing the amount of refund claimed by the petitioner on the ground that certain transactions and credit