The Gujarat High Court recently comprising of a bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore remarked 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 bench directed the respondent/department to process the claim of refund made by the writ petitioner/assessee for the unutilized IGST Credit lying in the Electronic Credit Ledger under Section 54 of the CGST Act 2017.
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 ofRs.21,66,887/-.
The writ petitioner 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 petitioner that being an SEZ Unit making Zero Rated Supplies under the GST, the writ petitioner has not utilised the credit and it is lying unutilized in the Electronic Credit Ledger.
Courts Observation and Judgment
The court has held that the writ petitioner is 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 writ 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 ElectronicCredit 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."
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