Madras High Court
Platinum Holdings Private ... vs Additional Commissioner Of Gst & on 11 August, 2021
W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.08.2021
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P. No.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
WMP.No.16417, 16423, 16426, 16419 & 16421 of 2020
W.P.No.13284 of 2020
Platinum Holdings Private Limited
Represented by its Authorised Signatory
M.Sreehari ...Petitioner
Vs.
1. Additional Commissioner of GST &
Central Excise (Appeals-II)
Newry Towers, 2nd Floor, Plot No.2054, I Block,
II Avenue, Anna Nagar,
Chennai-600040.
2. Assistant Commissioner of GST & Central Excise
Tambaram Division, Chennai Outer Commissionerate,
Chennai-600073. ...Respondents
Prayer in W.P.No.13284 of 2020: Writ Petition filed under Article 226 of the
Constitution of India praying to Writ of certiorarified mandamus calling for the
records pertaining to impugned Common Order-in-Appeal on the file of the 1st
respondent herein in Order-in-Appeal Sl.No.66/2020 dated 07.08.2020 and quash
the same and consequently directing the respondents to grant to the petitioner the
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
refund of the Central Goods and Services Tax, State Goods and Services Tax and
Integrated Goods and Services Tax paid by the petitioner on supply of goods and
services for the past period of November, 2017.
(In all WPs)
For Petitioner : Mr.P.B.Harish
For Respondents : Mrs.R.Hemalatha
Senior Standing Counsel
COMMON ORDER
The petitioner is a Special Economic Zone (SEZ) and has effected
purchases from several suppliers/vendors for the development of the SEZ. I am
concerned in these writ petitions with the rejection of the request of the
SEZ/petitioner for refund of taxes paid under the Central Goods and Services Tax
Act, 2017 (in short 'CGST Act'), State Goods and Services Tax Act, 2017 (in short
'SGST Act') and Integrated Goods and Services Tax Act, 2017 (in short 'IGST
Act').
2. The admitted facts are as follows:
(i) Supplies were effected to the petitioner, under invoices that included
components of SGST, CGST and IGST.
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(ii) The supplies are zero-rated insofar as the recipient is a SEZ, an entity
not liable to tax in regard to the supplies made to it for development or export.
(iii) Thus admittedly, the only component of tax that ought to have been
levied in this case was IGST, despite which, the suppliers had mulcted the
supplies with SGST and CGST also.
(iv) Despite the petitioner not being liable to the payment of taxes, the
invoices have been settled in full and tax has been paid on all the zero rated
supplies.
3. On the basis of the aforesaid admitted facts, the petitioner filed
applications for refund of the taxes erroneously remitted on various dates. The
applications were deficient in some respects and deficiency memos were issued.
Pursuant to correction of the deficiencies, the applications were taken on file on
11.10.2019.
4. A show cause notice was issued on 31.10.2019, where the locus of the
petitioner to claim the refund was questioned, the respondent being of the view
that the petitioner was not entitled to the refund on various grounds, including
that, as per Section 54 of the CGST Rules, only a supplier of services would be
entitled to claim refund and not the SEZ itself.
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
5. A reply dated 22.11.2019 was filed to the show cause notice which this
Court does not have the benefit of since it has not been enclosed in the
compilation. Be that as it may, the impugned orders-in-original have come to be
passed by the 1st respondent as against which the petitioner filed appeals before
the 1st respondent, that have also come to be rejected. Appellate orders dated
07.08.2020 are the subject matter of the present writ petitions.
6. The issue for resolution has been crystallized at para 5 of the impugned
order as to 'whether a SEZ unit is eligible to claim refund of unutilized Input Tax
Credit (ITC)'. The authority refers to the provisions of Section 54 of the CGST
Act dealing with applications for refund and Rule 89 (1) of the Central Goods and
Services Tax Rules, 2017 (CGST Rules) under Chapter X thereof, which deal with
the procedure for disposal of applications seeking refund of tax, interest, penalty
fees or other amounts.
7. The conclusion at para 7.1 is based upon a reading of the provisions of
the Provisions/Rules aforesaid, to the effect that an application for refund would
be maintainable only if filed by the supplier of goods or services and not by any
other entity including the recipients of the services, such as the petitioner SEZ
before me.
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
8. According to the learned counsel for the petitioner, there is no restriction
placed on who might claim refund of tax. Admittedly, the supplies at issue in the
present writ petitions are zero rated and hence in view of the admitted position
that the petitioner has, in fact, remitted taxes thereupon, there is no embargo on
the refund sought. The reference in Section 54 is to 'any person' and would,
according to the petitioner, include the SEZ as well. In support of this argument,
reference is made to Clause (g) of the Explanation at the foot of Section 54, which
provides clarity on what the relevant date for filing of an application for refund
would be, in cases of such applications being filed by an entity other than the
supplier. Had the position been that only a supplier could seek refund, there would
have been no necessity for such an Explanation in the first place.
9. Per contra, the revenue would refer to Rule 89, particularly the second
proviso thereof, stating that it is only the supplier that is intended to claim refund.
Logistically, it would be very difficult for the revenue to examine and determine
the eligibility of any other entity to such refund. It is for this reason that the
provisions of Section 54 (4) casts an onerous burden upon the applicant to provide
all documentary evidence along with the application seeking refund. In the present
case there is no allegation or material placed on record by the revenue to the effect
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
that the supplier has also made a claim for refund of the tax paid. There is, thus,
no double claim that has been made in the instant case.
10. Heard both learned counsel. Rule 89 of the CGST Rules coming under
Chapter X thereof provides for application to be filed seeking refunds of tax
penalty, interest, fee or any other amount. Rule 89 (6) states that the credit
available in the electronic cash or credit ledger shall be utilized towards payment
of tax and the balance shall be refunded in accordance with the provisions of
Section 54. Rule 89 of the CGST Rules reads thus:
REFUND
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 on goods exported out of India, may file an application
electronically in FORM GST RFD-01through 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 authorized operations, as endorsed by
the specified officer of the Zone;
(b) supplier of services along with such evidence regarding
receipt of services for authorized operations as endorsed by the
specified officer of the Zone:
..........
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
(2) The application under sub-rule (1) shall be accompanied by
any of the following documentary evidences in Annexure 1 in FORM
GST RFD-01, as applicable, to establish that a refund is due to the
applicant, namely:-
........
(2) The application under sub-rule (1) shall be accompanied by any of
the following documentary evidences in Annexure 1 in FORM GST
RFD-01, as applicable, to establish that a refund is due to the
applicant, namely:-
[(f) a declaration to the effect that tax has not been collected from the
Special Economic Zone unit or the Special Economic Zone developer,
in a case where the refund is on account of supply of goods or services
or both made to a Special Economic Zone unit or a Special Economic
Zone developer;
11. The provisions of Section 54, providing for refunds reads as follows:
REFUNDS
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:
..........
(4) The application shall be accompanied by—
(a) such documentary evidence as may be prescribed to establish that a refund
is due to the applicant; and
(b) such documentary or other evidence (including the documents referred to in
section 33) as the applicant may furnish to establish that the amount of tax and
interest, if any, paid on such tax or any other amount paid in relation to which
such refund is claimed was collected from, or paid by, him and the incidence of
such tax and interest had not been passed on to any other person:
........
Explanation.—For the purposes of this section,––
(1) “refund” includes refund of tax paid on zero-rated supplies of goods or
services or both or on inputs or input services used in making such zero-rated
supplies, or refund of tax on the supply of goods regarded as deemed exports,
or refund of unutilized input tax credit as provided under sub-section (3).
(2) “relevant date” means—
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(a) in the case of goods exported out of India where a refund of tax paid is
available in respect of goods themselves or, as the case may be, the inputs or
input services used in such goods,––
(i) if the goods are exported by sea or air, the date on which the ship or the
aircraft in which such goods are loaded, leaves India; or
(ii) if the goods are exported by land, the date on which such goods pass the
frontier; or
(iii) if the goods are exported by post, the date of dispatch of goods by the Post
Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports where a refund
of tax paid is available in respect of the goods, the date on which the return
relating to such deemed exports is furnished;
(c) in the case of services exported out of India where a refund of tax paid is
available in respect of services themselves or, as the case may be, the inputs or
input services used in such services, the date of––
(i) receipt of payment in convertible foreign exchange, where the supply of
services had been completed prior to the receipt of such payment; or
(ii) issue of invoice, where payment for the services had been received in
advance prior to the date of issue of the invoice;
(d) in case where the tax becomes refundable as a consequence of judgment,
decree, order or direction of the Appellate Authority, Appellate Tribunal or any
court, the date of communication of such judgment, decree, order or direction;
(e) in the case of refund of unutilized input tax credit under sub-section (3), the
end of the financial year in which such claim for refund arises;
(f) in the case where tax is paid provisionally under this Act or the rules made
thereunder, the date of adjustment of tax after the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of receipt of goods
or services or both by such person; and
(h) in any other case, the date of payment of tax.
12. Section 16 of the IGST Act defines zero rated supply and though, in this
case there is no dispute on the position that the supplies effected to the petitioner
SEZ, are indeed zero rated, I extract the same for completion of narration:-
ZERO RATED SUPPLY
16. (1) “zero rated supply” means any of the following supplies of goods or
services
or both, namely:––
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(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.
(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 unutilised
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.
13. The statutory scheme for refund under the CGST and SGST Acts,
permits any entity to seek a refund of taxes or other amounts paid under the
provisions of the Act, subject to satisfaction that is it so entitled, and that there is
no double claim as against the same amount. Ordinarily, though zero rated
supplies are not subject to the levy of taxes, the petitioner, in this case has
remitted the same as raised in the invoice, albeit erroneously.
14. The provisions of Section 54 of the CGST Act, providing for a refund,
apply to any person who claims such refund and who makes an application for the
grant of the same. The language of the provision is clear and does not contain, or
admit of any restriction in its operation.
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15. Clause (h) of the explanation stipulates what the ‘relevant date’ for
purposes of making the application is, in the case of a person other than a supplier
of goods and services. Clause (h) is a residuary Clause which states that the date
of payment of tax is the relevant date in the case of any goods not covered by
Clauses (a) to (g) of Clause (2) of the explanation. Thus, the statutory scheme for
refund admits of applications to be filed by any entity that believes that it is so
entitled, including the petitioner SEZ. The language of Rule 89, echoes that of
Section 54, and both the aforesaid provision and Rule commence with the phrase
'any person'. The only exclusion is of the person covered under a notification
issued under Section 55, admittedly inapplicable to the petitioner.
16. Learned Senior Standing Counsel has taken me through Rule 89,
particularly, the second proviso thereto, as well as Clause (f) of sub-Rule 2, which
refer to an application filed by a supplier to a SEZ. This, according to her, would
indicate that an application for refund should only be filed by a supplier. I do not
agree for the reason that Rule 89(1) does not envisage any such restriction and, in
my view, applies to any entity. No doubt, the second proviso refers to a supplier of
an SEZ, which is only one kind of entity that may make an application under Rule
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
89. This is not to say that the reference to a supplier, will exclude, by virtue of
such reference, other applicants.
17. Thus, on a combined reading of Section 54 and Rule 89, the restriction
which has been read into the provision by the Revenue is, in my view, misplaced.
In fact, the Officer in the impugned order proceeds on the basis that the second
proviso to Rule 89 deploys the word 'only', which I do not find in the second
proviso. It is a settled position that there can be no insertion of a word or phrase in
a statutory provision or in a Rule which must be read and applied, as framed. No
restrictions or amplifications of the Rule are permissible by interpretation. On the
legal issue of entitlement to refund, I hold in favor of the petitioner.
18. On the question of quantification of the refund, the revenue has raised a
legitimate apprehension; firstly, that such refund would be issued to the petitioner
only if it is established that no such claim has been made by the supplier, and
secondly, that the tax paid by the supplier to the SEZ has, in fact, been remitted to
the treasury under the statutory returns filed by the SEZ. This is a matter of fact
which the petitioner will have to establish before the respondent. This aspect of
the matter finds reference in Section 54(4), extracted earlier in this order, which
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provides for the refund application to be comprehensive and accompanied by all
relevant documentary evidence in support of the claim.
19. For the above purpose, the petitioner will appear before the 2nd
respondent on a date to be fixed by the authority and provide all material available
with it in support of its claim. Full liberty is granted to R2 to seek and obtain all
information as he may deem necessary to clear apprehensions in his mind,
including that the claims amount to a double deduction or that the taxes have not
been remitted to the treasury by the SEZ.
20. These writ petitions are disposed as above. Connected miscellaneous
petitions are closed. No costs.
11.08.2021
ska
Index: Yes/No
Speaking order/Non-speaking order
To
1. Additional Commissioner of GST &
Central Excise (Appeals-II)
Newry Towers, 2nd Floor, Plot No.2054, I Block,
II Avenue, Anna Nagar,
Chennai-600040
2. Assistant Commissioner of GST &
Central Excise
Tambaram Division, Chennai Outer Commissionerate,
Chennai-600073
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W.P. Nos.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
DR.ANITA SUMANTH, J.
ska
W.P. No.13284, 13286, 13287, 13289, 13291 & 13292 of 2020
WMP.No.16417, 16423, 16426, 16419 & 16421 of 2020
11.08.2021
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