2026-VIL-311-GSTAT-RJK
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SGST Tribunal

GST - Refund of unutilised Input Tax Credit lying in Electronic Credit Ledger - Section 54 of CGST Act, 2017 - Respondent, an SEZ unit, filed refund application under the category of "any other" for unutilised ITC lying in its Electronic Credit Ledger. SCN issued and the refund claim was rejected under Rule 92(3) of CGST Rules, 2017. FAA allowed the appeals filed by the Respondent - The Revenue filed appeals before the Tribunal. Respondent took an additional stand that the refund claimed is of excess tax paid by it and not of unutilised ITC under Section 54(3) - Whether the refund claim falls under the category of refund of unutilised ITC lying in the Electronic Credit Ledger or refund of excess tax paid by the supplier - HELD - The SCN itself records that the refund application was filed under the category of "any other" for ITC remaining unutilised in the Electronic Credit Ledger. The order of the FAA records that the claim relates to unutilised ITC in respect of credit distributed by the Input Service Distributor and in some cases tax paid on inward supplies by suppliers. This was never questioned or controverted by the Respondent at any stage - The additional stand that the refund is of excess tax paid is not backed by any documentary evidence or law. The supplier paid the tax voluntarily for a long time and it cannot be assumed that the tax was paid by mistake or under duress or coercion. Both the Revenue and the Respondent are on the same page that the refund claims pertain to unutilised ITC availed on the basis of credit distributed by the Input Service Distributor - The claim is held to be a refund of unutilised ITC distributed by the Input Service Distributor and the additional plea of refund of excess tax paid is not accepted - Refund of ITC distributed by Input Service Distributor to SEZ unit - Section 54 of CGST Act, 2017 read with Rule 89 of CGST Rules, 2017 – Respondent-SEZ claimed refund of unutilised ITC lying in its Electronic Credit Ledger, being credit distributed by the Input Service Distributor - Revenue contended that under the proviso to Rule 89(1) the application for refund in respect of supplies to an SEZ unit is to be filed by the supplier. It was further contended that the SEZ unit is not liable to pay tax on such supplies, and that credit distributed by the ISD cannot be equated with tax paid on supplies made to the SEZ unit - Whether the refund of unutilised ITC distributed by the Input Service Distributor can be claimed by an SEZ unit as the recipient of the services - HELD - The Input Service Distributor, as defined in Section 2(61) of the CGST Act, is an office of the supplier which receives tax invoices towards input services and issues a prescribed document for distributing the credit. In such a case it is not possible for the supplier of goods and services to file a refund application for the input tax credit distributed by the Input Service Distributor. As there is no specific supplier who can claim the refund, the stand of the Revenue that the SEZ unit is not entitled to seek refund of the ITC paid in connection with goods or services supplied to it is not tenable - The proviso to Rule 89 does not use the word "only", and no word can be inserted into a Rule by interpretation. The restriction read into the proviso by the Revenue is therefore misplaced. An SEZ unit cannot be denied refund of ITC solely on the ground that it is not the supplier. No decision contrary to this position was cited by the Revenue - The contention of the Revenue is rejected and the SEZ unit is held entitled to claim refund of the unutilised ITC distributed by the Input Service Distributor - Relevance of Board circulars on manual filing of refund claims - Circular No. 17/17/2017-GST and Circular No. 24/24/2017-GST - Revenue submitted that the refund claim could not be processed under any of the categories of refund specified in the circulars prescribing manual filing and processing of refund claims, and therefore the claim was rightly rejected - Whether the Board circulars restrict the right of the SEZ unit to claim refund - HELD - The Circulars were issued due to non-availability of the refund module on the common portal and prescribe the procedure for manual filing and processing of refund claims. They did not bring any substantial change in the law relating to the right of refund to SEZ units and do not in any manner circumscribe the right of the SEZ unit to claim refund - The reliance of the Revenue on the Circulars is rejected, no fault is found with the orders of the FAA, the orders are affirmed – The appeals filed by the Revenue are dismissed
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