Gujarat HC in the case of M/s Britannia Industries Limited Versus Union of India

Case Covered:

M/s Britannia Industries Limited

Versus

Union of India

Facts of the Case:

By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs:

A)That this Hon’ble Court may be pleased to issue an appropriate a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India ordering and directing the respondents themselves, their officers, and subordinates to act upon or grant the petitioner refund of unutilized IGST credit lying in Electronic Credit Ledger.

A1. That this Hon’ble Court may be pleased to issue an appropriate a Writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India to set aside the order of rejection of refund dated 01.08.2019 passed by the Deputy Commissioner, CGST, Mundra Division.

B. That this Hon’ble Court may be pleased to issue an appropriate a Writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing the respondents that in case there is no rule for SEZ refund then rule(s) for granting refund of unutilized IGST credit lying in electronic Credit Ledger be framed to bring parity in a 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.”

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 Rs.99,05,156/- for the year 2018-2019.

Observations of the Court:

In facts of the present case, instead of Rule 96 as was applicable in the 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 the procedure for application for refund of tax, interest, penalty, fees, and prescribes that in respect of supplies to an 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 an 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. 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 the 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 required to be granted.

The decision of the Court:

We are of the opinion that in view of the aforesaid decision in case of M/s. Amit Cotton Industries(supra), the petitioner is entitled to claim a refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as the input tax credit is distributed by the input service distributor.

For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned order is quashed and set aside. The respondents are directed to process the claim of refund made by the petitioner for unutilized IGST credit lying in Electronic Credit Ledger under section 54 of the CGST Act, 2017. Such exercise shall be completed within three months from the date of receipt of the writ of this order.

The rule is made absolute to the aforesaid extent. No order as to costs.

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