SEZ unit can claim refund of ITC of GST distributed by ISD unit : Gujarat High Court

In the High court of Gujarat at Ahmadabad

Appeal: R/Special Civil Application No. 15473 of 2019

Case : Britannia Industries Limited Vs Union of India (Gujarat High Court)

Date of order - 11/03/2020



Analysis


Britannia Industries Limited Vs Union of India (Gujarat High Court)


Facts


The petitioner, a limited company, 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.


Being a SEZ unit making zero rated supplies under the GST, the petitioner was not able to utilize the credit of the Input Tax Credit of IGST from its ISD and it was lying unutilized in the Electronic Credit Ledger of the petitioner. Thus the petitioner made an application for refund of such ITC.


Deputy Commissioner, Central GST Mundra Division, Gandhindham issued a show cause notice with a proposal of rejection of the claim of refund of the unutilized ITC, reason being the supply of Goods and/or Services to SEZ unit is Zero rated hence are not eligible for refund under Section 54 of CGST Act.


Also contended that SEZ unit is not supposed to pay any tax on output supply either under forward charge or reverse charge mechanism and hence no question of ITC and further, till date no circular, notification/ relevant guidelines have been issued by the board providing guideline to process GST refund claim application of units situated in SEZ in respect of tax paid an inward supplies.


The Petitioner filed the written submissions in personal, however an order dated 01.08.2019 was passed by the Respondent rejecting the refund.


Aggrieved by the order of the Respondent dated 01.08.2019, the Petitioner approached the High Court under Article 226 of the Constitution of India to issue a writ of mandamus to direct the Respondent to grant the said refund, set aside the order of rejection of refund.


Issue before the High Court


Whether the Petitioner, being an SEZ unit, can claim refund of unutilized IGST credit lying in Electronic Credit Ledger under section 54 of the CGST Act, 2017?


Conclusion by High court


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, HC held that

“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 SEZ unit is not tenable.”

The court also places reliance on notification no. 28/2012 dated 20th June,2012 related to distribution of ITC by ISD in case of service tax.


As per notification, 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


Therefore, court further fortified that

“22……….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 Court also relied on the decision of M/s. Amit Cotton Industries(supra),and

Court further concluded that


“23. 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 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 input tax credit is distributed by the input service distributor.”

Therefore, the High Court allowed the writ petition and quashed the impugned order passed by the Respondent. Further, the Court ordered the Respondents to process the Petitioner’s claim within 3 months, for refund of unutilized IGST credit lying in Electronic Credit Ledger under Section 54 of the CGST Act.


 

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FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT


1. Rule returnable forthwith. Learned Standing Counsel Shri Ankit Shah waives service of rule on behalf of the respondents.


2. 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 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.”


3. 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.


4. It is the case of the petitioner that being a SEZ unit making zero rated supplies under the GST, the petitioner was not able to utilize the credit of the Input Tax Credit of IGST from its ISD and it was lying unutilized in the Electronic Credit Ledger of the petitioner.


5. The petitioner therefore, made an application to claim such refund. It appears that show cause notice dated 2nd July, 2019 was issued by respondent no.3 – Deputy Commissioner, Central GST Mundra Division, Gandhindham with a proposal of rejection of the claim of refund of the unutilized ITC on the following grounds :


a. The Petitioner is situated in Adani Port & SEZ and as per the CGST the supply of Goods and/or Services to SEZ unit is Zero rated hence are not eligible for refund under Section 54 of the Central Goods and Services Act, 2017 (hereinafter referred to as CGST}.


b. The refund filed by the Petitioner cannot be processed under any category of refund specified under manual refund processing Circular No. 17/17/2017-GST) dated 15.11.2017 and Circular No. 24/24/2017-GST dated 21.12.2017.


c. For the supply received from outside SEZ, SEZ unit is not supposed to pay any tax whether under forward charge or reverse charge mechanism and for the supply received from another unit within SEZ, any and all such supplies have no tax treatment and therefore there is no question of forwarded charge or reverse charge tax payment. SEZ unit is not supposed to pay any tax and thus there would be no question of ITC.


d. That till date no circular, notification/ relevant guidelines have been issued by the board providing guideline to process GST refund claim application of units situated in Special Economic Zones in respect of tax paid an inward supplies. Therefore in absence of any circular/ notification/ relevant guidelines to process GST refund claim application of units situated in SEZ, this office is unable to process the refund application.”


6. The petitioner thereafter, during the course of personal hearing held on 23rd July, 2019 submitted written submissions in Form-GST-RFD-09. Respondent no.3-Deputy Commissioner, Central GST Mundra Division however, passed an order dated 1st August, 2019 rejecting the refund claim of Rs.99,05,156/- in GST-FORM-RFD-06 on the grounds mentioned in the show cause notice rejecting the written submissions filed by the petitioner.


7. The petitioner therefore, being aggrieved has filed this petition with the aforesaid prayers.


8. Learned advocate Mr. Anandodaya S. Mishra for the petitioner submitted that the petitioner is entitled to refund of the unutilized ITC distributed by ISD as section 16 of the CGST Act provides for input tax credit charged on any supply of goods or services or both by the supplier which are used or intended to be used in the course or furtherance of the business of the petitioner.


9. Learned advocate Mr. Mishra relied upon the provisions of section 2(61) of the Central Goods And Service Tax Act,2017 (for short ‘CGST Act’) which defines “input service distributor” which means that an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purpose of distributing the credit of the tax paid on the said services to a supplier of taxable goods or services. It was therefore submitted that as the petitioner has received input tax credit (for short ‘ITC’) from ISD, the petitioner is entitled to the refund being an SEZ unit.


10. Learned advocate for the petitioner also referred to the notification no.28/2012 dated 20th June, 2012 clarifying the procedure for distribution of ITC by ISD and submitted that if the credit of service tax is distributed to all the units in the manner prescribed in the said notification by an ISD, then the refund of IGST credit distributed should also be refunded to the SEZ units as SEZ unit is not an excluded.


11. Learned advocate for the petitioner thereafter, referred to the grounds for rejection of   the  refund  claim of the petitioner and submitted that the petitioner being an SEZ unit having a zero rated supply cannot be denied the refund under section 54 of the CGST Act because there is no express provision for rejecting the refund under the CGST Act. It was submitted that the sole intention of section 16 of the IGST Act which provides for zero rated supply is to avoid the cascading effect of taxation including the zero tax liability for exports and hence, the supplies made to a SEZ have been made as zero rated supplies. It was therefore, submitted that the entire scheme of the GST does not restrict any distribution of common credit by an ISD to an SEZ unit and on a conjoint reading of section 16 of the IGST Act and section 54 of the CGST Act, the petitioner is entitled to get the refund of unutilized ITC lying in the Electronic Credit Ledger.


12.Learned advocate for the petitioner thereafter relied upon circular no. 17 dated 15th November, 2017 issued by GST policy wing of Central Board of Excise and Customs to submit that unutilized ITC of IGST paid and distributed by ISD is required to be refunded after the application is filed by the petitioner in FORM-GST-RFD-01A after 14th May, 2019 as per the said circular.


13. It was submitted that refund being inclusive in nature, the same is also required to be granted with regard to unutilized input tax credit under section 54 of the CGST Act. Reliance was also placed on the decision of this Court in case of M/s. Amit Cotton  Industries Through partner Veljibhai Virjibhai Ranipa v. Principal Commissioner of Customs rendered in Special Civil Application No.20126/2018 on 27th June, 2019, wherein in similar facts, this Court allowed the claim made by the petitioner for refund of the IGST in case of an export unit.


14. It was therefore, submitted that in view of the aforesaid decision, the petition is required to be allowed by directing the respondents to grant refund of ITC of Rs.99,05,156/- lying in Electronic Credit Ledger of the petitioner.


15. On the other hand, learned Standing Counsel Mr. Ankit Shah for the respondents vehemently opposed the petition. Mr. Shah relying upon the averments made in affidavit in reply submitted that the petitioner is not entitled to claim refund of the IGST which was distributed by ISD.


16. Learned advocate Mr. Shah also raised a preliminary objection that the petition is not maintainable as alternative remedy of filing an appeal before the appellate authority is available to the petitioner under the provisions of section 107 of the CGST Act. It was submitted that the petitioner could not have by-passed the appellate authority without any justifiable grounds and therefore, the petition is required to be rejected on this ground alone.


17. With regard to the submissions made by the petitioner on the merits of the case as to the entitlement of the refund of the input tax credit distributed by the ISD, learned advocate for the respondents referred to the following averments made in the affidavit in reply :


“7. It is submitted before the Hon’bte Court that Section 2 (19) of lntegrated Goods and Services Tax Act, 2017 states that “Special Economic Zone“ shall have the same meaning as assigned to it in clause (za) of section 2 of the Specific Economic Zones Act, 2005. Further, as per Section 2 (za) of the Special Economic Zones Act, 2005. “Special Economic Zone” means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone. Further, the government has offered various incentives and facilities to the units in SEZs for attracting investments into the SEZs, including foreign investment. The incentives includes duty free import/domestic procurement of goods for development, operation and maintenance of SEZ units, exemption from Central Sales Tax, exemption from Service Tax and from State sales tax which have now been subsumed into GST and supplies to SEZs are zero rated under IGST Act, 2017.


7.1 As per Notification No 15/2017- Integrated Tax (Rate) dated 30-06-2017, in exercise of the powers conferred by subsection (1) of section 6 of the Integrated Goods and Service Tax Act, 2017, the Central Government have exempted all goods or services or both imported by a unit or a developer in the Special Economic Zone, from the whole of the integrated tax leviable thereon under sub-section (7) of section 3 of the Customs Tariff Act, 1975 (51 of 1975) for authorized operations and as per Notification No. 18/2017 Integrated Tax (Rate) exempted services imported by a unit or a developer in the Special Economic Zone for authorized operations, from the whole of the integrated tax leviable thereon under section 5 of the Integrated Goods and Services Tax Act, 2017. Thus, above notifications exempts all goods or services or both imported by a unit or a developer in the SEZ from the whole of the integrated tax for authorized operations.


7.2 Further, as per Section 16 (1) (b) of Integrated Goods and Services Tax Act, 2017 supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit is considered as “Zero rated Supply”. The relevant Section states as under:


16(1) ”zero rated supply” means any of the following supplies of goods or services or both, namely:


(a) ——-


(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.


Thus, as per Section 16(1) of the Integrated Goods & Services Tax Act, 2017 the supply of goods and / or Service to a SEZ unit i.e. petitioner in this case, is ZERO RATED. Thus, the petitioner being a SEZ unit was not eligible for Refund under Section 54 of the CGST Act, 2017.


7.3 Further, Section 16(3) of Integrated Goods and Services Tax Act, 2017 prescribed the options under which a registered person becomes eligible for claim of refund. The relevant Section states as under :


16(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:


(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit; or


(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.


From the above, it is clear that under Option 1  which is available under section 16 (3) (a) of IGST Act, a registered person may supply such goods or services or both under bond or Letter of undertaking to SEZ Developer or SEZ Co-Developer or SEZ Units without payment of integrated tax and also claim refund of unutilized input tax credit. Further, under Option 2 under section 16

(b) of IGST Act a registered person may supply such goods or services or both to SEZ Developer or SEZ Co-Developer or SEZ Units on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied in accordance with Section 54 of Central Goods and Service Tax Act or rules made thereunder. Thus, it is clear that as per the provisions of Section 16 (3) of Integrated Goods and Services Tax Act, 2017 only the supplies of goods or services or both to SEZ Developer or SEZ Co-Developer or SEZ Units is eligible for claim of refund and there is no provision for granting of refund to the SEZ unit in the IGST Act, 2017. Therefore, claim of the petitioner holds no merits.


7.4 Section 54 of the Central Goods and Services Tax Act, 2017 deals with provisions relating to granting of refund. As per sub section 3 of Section 54 of the CGST Act, 2017, a registered person may claim Refund of any unutilized input tax credit at the end of any tax period, provided that no Refund of unutilized input tax credit shall be allowed in cases other than zero-rated supplies made without payment of tax and where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the government on the recommendations of the Council.


7.5 Further. Rule 89 of the Central Goods and Services Tax Rules, 2017 deals with granting of the refund to the assessees. Sub-rule 1 of Rule 89 is reproduced as under:


89. Application for refund of tax, Interest, penalty, fees or any other amount.


(1) Any person, except the persons covered under notification issued under section 55, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, other than refund of integrated tax paid or} goods exported out of India, may file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner :


Provided that any claim for refund relating to balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49 may be made through the return furnished for the relevant tax period in FORM GSTR-3 or FORM GSTR-4 or FORM GSTR-7, as the case may be:

Provided further that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the


(a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone;


(b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone:

[Provided also that in respect of supplies regarded as deemed exports, the application may be filed by,


(a) the recipient of deemed export supplies; or


(b) the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund 


Provided also that refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the last return required to be furnished by him.


From the above stated provisions, it is clear that as per Rule 89(1) of the CGST Rules, 2017 in case of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the supplier of the goods or services and not by the recipient/receiver of the goods or services. Thus, the petitioner being the receiver is not eligible for refund of ITC and Deputy Commissioner has rightly rejected the refund claim of the petitioner.


7.6 Thus, on collective reading of provisions of Section 54(3) of the Central Goods and Services Tax Act, 2017, Section 16 of the Integrated Goods and Services Tax Rules, 2017 together with Rule 89 (1) of the Central Goods and Services Tax Rules, 2017, it is clear that when a supply is made to the SEZ unit or SEZ Developer it is the supplier and not the receiver who shall file the Refund application. The reason for the same is that in case of supply to a SEZ unit (which is considered as Interstate Supply) the liability to pay tax on such supplies is on the supplier. The receiver i.e. SEZ unit is not at all liable to pay any kind of tax on such supplies received by them. Thus, the petitioner was not at all liable to pay any tax on the supplies received by them and therefore is not liable to claim refund as per the prevalent provisions as discussed herein above.


7.7 The Central Board of Indirect Taxes and Customs (CBIC) looking to the difficulties being faced by the exporters in getting their genuine refunds after implementation of GST from 1st July, 2017 has issued Circular No: 17/17/2017-GST dated 15.11.2017 for manual filing and processing of refund claims in respect of zero- rated supplies and Circular No.: 24/24/2017-GST dated 21.12.2017 for manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger. However, the Refund claimed by the petitioner cannot be processed under any of the category of eligible Refunds Specified under Manual Refund Processing Circular No.: 17/17/2017-GST dated 15.11.2017 and Circular No.: 24/24/2017-GST dated 21.12.2017 and accordingly, the refund claim is rightly rejected vide the impugned order.


7.8 Further, it is to submit that neither any Notification nor any circular or guidelines have been issued by the Government/Central Board of Indirect Taxes and Customs providing guidelines for processing of Input Tax Credit Refund claims filed by the units located in the Special Economic Zones, in respect of Tax Paid on inward supplies. Therefore, in absence of any circular/ Notification /relevant guidelines to process Input Tax Credit Refund claims of units located in the Special Economic Zones, the petitioner could not be granted refund and hence the petitioners claim was rightly rejected by the Deputy Commissioner.


7.9 Further, it is submitted before the Hon’ble Court that in GST regime SEZ units are not required to pay any tax on supplies made to them by Domestic Tariff Area units, rather it is the supplier who is required to pay taxes if that supplier is not selling the goods under LUT and that the supplier is only eligible to claim the Refund. Therefore, Order in Original No.: 28 / Mundra / CGST / Refund / 2019-20 dated 01.08.2019 passed by Deputy Commissioner, CGST, Mundra Division, Gandhidham rejecting refund claim of Rs. 99,05,156/- of the petitioner, in terms of provisions of Section 54 of Central Goods and Services Tax Act, 2017 read with provisions of Rule 89 of the Central Goods and Services Tax Rules, 2017, Notification No.: 55/2017-Central Tax dated -GST dated 15.11.2017 and Procedure Circulars; Nos.: 17/17/2017-GST and 24/24/2017-GST dated 21/12/2017 in respect of the petitioner is just fair, proper and legal. The claim of the petitioner in the present petition is devoid of merits and is liable to be rejected.


8. Further, it is to submit before the Hon’ble High Court that High Court of Madras in the case of M/s Stromtek Automation P. Ltd. v/s. Addi. of GST & C. Ex. Chennai reported as 2019 (28) G.S.T.L. 436 (Mad.) has observed that this is a fit case to relegate the writ petitioner to alternate remedy of filing an appeal to Commissioner (Appeals)-II. The relevant paras of the subject judgment are reproduced as under:


“20. This takes us to the alternative remedy aspect. There is no dispute or disagreement between the two Learned Counsel before this Court that there is an alternate remedy to the writ petitioner by way of statutory appeal to the Commissioner (Appeals)-II, Newry Towers No.: 2054-1, II Avenue, Anna Nagar, Chennai 600 040.


21. The exercise of writ jurisdiction when alternate remedy is available, is an issue, which has been dealt with in a long line of authorities by the Hon’ble Supreme Court. Suffice to refer to KC. Mathew case Authorized Officer, State Bank of Travancore v. Mathew K.C. reported in (2018) 3 SCC 85 and Satyawati Tondon case [United Bank of India v. Satyawati Tondon and Others reported in (2010) 8 SCC 110.


22. To be noted, in Satyawati Tondon case, Hon’ble Supreme Court has held that with regard to alternative remedy the same has to be construed strictly when it comes to cases pertaining to taxes, CESS etc. To put it otherwise, fiscal laws in general.”


18. Relying on the  aforesaid  averments,  it  was submitted by Mr. Shah that the petitioner is not entitled to refund of the ITC as the petitioner is an SEZ unit and all supplies to such unit is a zero rated supply as per section 16(1) of the IGST Act and as such, only the supplies of goods or services or both to SEZ developer or SEZ co-developer or SEZ unit is eligible for claim of refund and there is no provision for granting of refund to the SEZ unit in the IGST Act, 2017 except the procedure prescribed under section 16(3) of the IGST Act. It was therefore, submitted that in view of the provision of section 54 of the CGST Act read with Rule 89 of the Central Goods and Service Tax Rules,2017 (for short ‘CGST Rules’) only a supplier of goods or services can file an application for refund and not recipient of the services. As in the facts of the case, the petitioner is a recipient of service; the petitioner is not entitled to get the refund under the provisions of the CGST Act read with the CGST Rules. It was further pointed out that there is no circular, notification or guidelines issued by the Government or Central Board of Indirect Taxes and Customs to process the input tax credit refund claims of the units located in the SEZ and therefore, the competent authority has rightly rejected the claim of the refund made by the petitioner by passing the impugned order.


19. Having heard the learned advocates for the respective parties and having gone through the materials on record, in order to decide as to whether the petitioner is entitled to refund of ITC distributed by ISD, we may refer to the following provisions of law relevant for the purpose of deciding the controversy between the parties :


Central Goods Service Tax Act,2017


2(61) “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office;


xxx


Eligibility and condition for taking input tax credit.


16(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.


(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,—


(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;


(b) he has received the goods or services or both.

Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods

or otherwise;


(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and


(d) he has  furnished  the  return  under  section 39:


Provided that where the goods against an invoice are received in lots or installments, the registered person shall be entitled to take credit upon receipt of the last lot or installment:


Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed:


Provided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.


(3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.


(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.


Xxx


Refund of tax.

54. (1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:


Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed.


(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.


(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:


Provided that no refund of unutilised input tax credit shall be allowed in cases other than—


(i) zero-rated supplies  made  without  payment  of tax;


(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:


Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:


Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.


Xxx”


Integrated Goods Service Tax Act,2017


16. (1) “zero rated supply” means any of the following supplies of goods or services or both, namely:–


(a) export of goods or services or both; or


(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.


(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.