THE HON’BLE THE CHIEF JUSTICE SRI APARESH KUMAR SINGH AND THE HON’BLE SRI JUSTICE G.M.MOHIUDDIN

ORDER:

Sri Narendra Dave, learned counsel appears for M/s. Lakshmi Kumaran & Sridharan, learned counsel for petitioner.

Smt. Bokaro Sapna Reddy, learned Senior Standing Counsel for Income-tax appears for respondents.

2. In the appeal preferred by the department under Section 107(2) of the Central Goods & Services Tax Act, 2017 (for short ‘CGST Act’) against Refund Sanction Order (RFD-06) dated 07.10.2022, passed by respondent No.2/Refund Sanctioning Authority/original authority - Deputy Commissioner of Central Tax, Gachibowli Division, Rangareddy Commissionerate, the appellate authority vide impugned order dated 29.09.2023 has set aside the said order holding that the Refund Sanctioning Authority has erred in classifying the service as export of service without examining nature of service, place of provision of service and without examining the applicability of sub-sections (3) to (13) of Section 13 of Integrated Goods & Services Tax Act, 2017 (for short ‘IGST Act’). Therefore, supply does not qualify as export and refund is erroneous. The petitioner being aggrieved thereto has preferred the instant Writ Petition.

3. Learned counsel for the petitioner has drawn the attention of this Court to the Refund Sanction Order and submitted that sanction of the refund was made after satisfying that the petitioner has made zero rated supply of services and as per the Adjusted Total Turnover calculated in terms of Rule 89(4) of the Central Goods & Services Tax Rules, 2017 (for short ‘CGST Rules’), the net input tax credit would be Rs.1,43,97,841/- for which refund was sought. The Refund Sanctioning Authority found that the claim was within the limitation period. The petitioner had filed all the due returns and there were no dues pending for recovery from them. The provisions of unjust enrichment in terms of Section 54(8) of Central Goods & Services Tax Act, 2017 (for short ‘CGST Act’) were not applicable to the refund application. The refund amount claimed was found debited from the electronic credit ledger. They have not claimed the refund of ITC on invoices which are not reflected in FORM GSTR-2A and the refund is not barred under the provisions of 2^nd and 3^rd provisos to Section 54(3) of CGST Act inasmuch as the goods exported are not subjected to export duty and the supplier of goods or services or both has not availed the central tax or claimed refund of the integrated tax paid on such supplies. He thereby sanctioned refund of Rs.1,43,97,841/- in cash to the petitioner in terms of Section 54(8) of CGST Act and 92(1) of CGST Rules. It is submitted that pursuant to the said order, the departmental appeal was filed on two grounds.

“Whether the order of the Refund Sanctioning Authority in sanctioning refund of Rs.1,43,97,841/-

i. Without proper determination of “Turnover of Zero Rated Supply of services” as stipulated in Rule 89(4)(D) of Central Goods and Services Tax Rules, 2017 and “Adjusted Total Turnover” as stipulated in Rule 89(4)(E) of Central Goods and Services Tax Rules, 2017; and ii. Without proper verification of agreements to ascertain the nature of services and Place of provision of service as to whether they constitute “export of services” as per Section 2(6) of the Integrated Goods & Services Tax Act, 2017, is legal and proper?”

Learned counsel for the petitioner has drawn the attention of this Court to the discussions and findings from paras 15 to 23 of the impugned order. It is submitted that a perusal of the observations at para 17 of the impugned order would show that the contention of respondent No.2/appellant that inward foreign remittance during the relevant period were nil, and hence, the total zero rated supply of services for the claim period was ‘NIL’ and Adjusted total turnover was also ‘NIL’, was not sustainable and liable for rejection, as per the appellate authority. The appellate authority also found that the contenti