The Gujarat High Court recently comprising of a bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore has held that Input Tax Credit received from input service distributor lying unutilized in electronic credit ledger is liable to be refunded. (M/s. IPCA Laboratories Versus Commissioner)
The Respondent was ordered to Process the Claim for a Refund made by the Writ Petitioner for the Unutilized Integrated Goods and Services Tax (IGST) Credit lying in the Electronic Credit Ledger under Section 54 of the Central Goods and Services Tax (CGST) Act 2017 by The Division Bench..
Facts of the case
The writ applicant is a pharmaceutical company. One of the manufacturing facilities of the writ applicant – company is located in a Special Economic Zone at Kandla, Gandhidham. The writ applicant claims that it is authorized to operate as a Special Economic Zone at the Kandla SEZ, Kandla, Kutch and is engaged in the export of goods under the Letter of Undertaking (LUT) from the SEZ Unit. In the year 2017-18, the writ applicant accumulated Input Tax Credit (ITC) to the tune of Rs.21,66,887/-.
The writ applicant received the aforesaid Input Tax Credit of the integrated tax from its ISD and ITC inward supply charged by the supplier as is permissible under the law. It is the case of the writ applicant that being a SEZ Unit making Zero Rated Supplies under the GST, the writ applicant has not been utilized the credit and the same is lying unutilized in the Electronic Credit Ledger.
Courts observation & Judgment
The bench at the very outset observed that the issue raised in the present writ application is no longer res integra in view of the judgement and order passed by this Court dated 11th March 2020 in the case of M/s. Britannia Industries Limited vs. Union of India [Special Civil Application No.15473 of 2019]. We take notice of the fact that M/s. Britannia Industries Limited (supra) is based on M/s. Amit Cotton Industries vs. Principal Commissioner of Customs [Special Civil Application No.20126 of 2018 decided on 27th June 2019].
The bench taking note of the above remarked, “In view of the aforesaid, the writ applicant could be said to be entitled to claim the 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.”
The bench allowing the application remarked, “For the foregoing reasons, this writ application succeeds and is hereby allowed. The impugned order is hereby quashed and set aside. The respondents are directed to process claim of refund made by the writ applicant for the unutilized IGST Credit lying in the Electronic Credit Ledger under Section 54 of the CGST Act 2017. Let this exercise be undertaken at the earliest and completed within a period of three weeks from the date of receipt of the writ of this order. Direct service is permitted.”
Read Judgment @Latestlaws.com
Picture Source :