Special Economic Zone units are eligible for GST refunds as per Section 54 of the CGST Act if suppliers have not claimed refunds themselves, notwithstanding the requirements of applicable GST laws.

ORDER :

By this Common Order, both the Writ Petitions are being disposed of.

2. The petitioner is before this Court against the Impugned Common Order-in-Appeal Nos.62 and 63 of 2021 dated 27.04.2021 passed by the Joint Commissioner of GST and Central Excise (Appeals-II), Chennai.

3. By the Impugned Common Order, the petitioner's appeal against the Order-in-Original in R/O ARN AA330920029741G (C.No.V/18/18/2020-2021-GST-RF) dated 12.09.2020 in W.P.No.26164 of 2021 and Order-in-Original in R/O ARN AA331220008378P dated 03.12.2020 in W.P.No.26166 of 2021 have been rejected.

4. Operative portion of the Impugned Common Order-in-Appeal Nos.62 and 63 of 2021 dated 27.04.2021 is extracted below:-

“11. Thus, proof of receipt of goods or services as evidenced by the specified officer of the zone is a pre-requisite for filing of refund claim by the DTA supplier. The claim for refund when made for supplies made to SEZ Unit/Developer has to be filed along with the prescribed documents. Further, no proof has been given by the appellant to the effect that their suppliers have not claimed any refund within their jurisdictional GST authorities.

12. It could be seen that the entire procedure is stipulated for a person having GST Registration making a zero-rated supply is eligible to claim GST refund in accordance with the provisions of the CGST Act, 2017 when the option of supply of goods or services with payment of integrated tax is exercised under claim of GST refund on tax paid.

13. A harmonious reading of Section 54 (3) of the CGST Act, 2017 and Section 16 & 2(5) of the IGST Act, 2017 reveals that any person doing exports is eligible to claim refund of ITC; that the second proviso to Rule 89(1) of CGST Rules, 2017 unambiguously stipulates that refund shall be claimed only by the suppliers of goods to the SEZ Unit and not by SEZ Unit. Further, Rule 89(2)(f) of CGST Rules, 2017, states that SEZ Units shall not avail ITC on the supplies received by them from non-SEZ suppliers.

14. Thus, on account of the aforesaid provisions concluded that SEZ Units/developers shall not claim refund of unutilized ITC in respect of supplies received by them from non-SEZ suppliers. The GST law facilities the eligibility of refund claim to the suppliers who made supplies to SEZ Units/Developers with payment of tax. Accordingly, I am of the considered view that the refund claimed by the appellant is not in accordance with the provisions of the GST law and therefore liable to be rejected.

ORDER

15. In view of the foregoing facts and discussions, I reject the appeals filed by the appellant.”

5. The specific case of the petitioner is that the petitioner is engaged in manufacture of Radio Frequency (RF) Equipments and that the petitioner's unit is situated in SEZ and therefore all the supplies to the petitioner were to be made without payment of duty by the suppliers.

6. The further case of the petitioner is that since the petitioner's status as a SEZ unit located in SEZ was not reflected in the GST portal, the suppliers therefore paid GST on supplies made to the petitioner. Therefore, the petitioner claimed refund of the GST paid by the suppliers and borne by the petitioner under Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.

7. Learned Counsel for the petitioner would submit that the issue is squarely covered by the decisions of the Courts rendered in the following cases:-

i. Platinum Holdings Private Limited, Represented by its Authorized Signatory Vs. Additional Commissioner of GST & Central Excise (Appeals-II), Chennai and another in W.P.Nos.13284 of 2020 etc., batch dated 11.08.2021, 20