Case Details: Urjita Electronics Pvt. Ltd. Versus Joint Commissioner of GST and Central Excise (2025) 29 Centax 360 (Mad.)
Judiciary and Counsel Details
- C. Saravanan, J.
- Shri N. Murali, for the Petitioner.
- Shri Rajendran Raghavan, Senior Standing Counsel for the Respondent.
Facts of the Case
The petitioner, a unit located in a Special Economic Zone (SEZ) and engaged in the manufacture of radio frequency equipment, faced an issue where its SEZ status was not correctly reflected on the GST portal. As a result, domestic suppliers treated the supplies as regular taxable transactions and paid GST on them. The petitioner, having borne the tax on these zero-rated supplies, filed refund claims under Section 54 of the CGST Act read with Rule 89 of the CGST Rules, arguing that the tax was mistakenly paid by the suppliers and should not be borne by the petitioner.
The refund claims were rejected through separate Orders-in-Original, which stated that under Rule 89(1) and Rule 89(2)(f) of the CGST Rules, only the supplier—not the SEZ recipient—is eligible to claim such refunds. The appellate authority upheld these rejections, noting that the petitioner failed to provide evidence that its suppliers had not already claimed refunds on the same supplies. In response, the petitioner approached the Madras High Court, asserting that it was entitled to the refund for the tax it had borne on the zero-rated supplies.
High Court Held
The Hon’ble Madras High Court held that SEZ units are indeed entitled to a refund of tax paid on zero-rated supplies where the tax was borne by them and not claimed by the suppliers. The Court clarified that neither Section 54 of the CGST Act nor Rule 89 prohibits such a refund, provided the SEZ unit submits declarations from suppliers confirming they have not availed ITC or claimed refunds. The appellate orders were set aside, and the matter was remanded for fresh consideration in accordance with the law, with a direction to grant the refund along with applicable interest.
