Electricity Supplied via Indian Intermediary to Foreign Buyer Qualifies as Zero-Rated Export for GST Refund: AP High Court

The Andhra Pradesh High Court has held that the electricity supplied via Indian intermediary to foreign buyers qualifies as zero-rated export for Goods and Service Tax (GST) refund. The bench of Justice R. Raghunandan Rao and Justice Subhendu Samanta observed that electricity supplied by an Indian power producer to Bangladesh—either directly or through an Indian intermediary—qualifies as a zero-rated export under GST law, entitling the supplier to a refund of unutilised input tax credit (ITC). The petitioner, SEIL Energy India Limited is engaged in the generation and supply of electricity from its thermal power plants in Andhra Pradesh. In the course of its operations, the company procures coal, inputs, capital goods and services on which GST is paid, resulting in accumulation of input tax credit. The dispute arose from SEIL’s supply of electricity to the Bangladesh Power Development Board (BPDB) under two arrangements. Firstly, direct supply of electricity to BPDB under a bilateral agreement. Secondly, indirect supply through Power Trading Corporation of India Ltd. (PTC), which had an existing agreement with BPDB and later substituted SEIL as the actual power generator through an amendment agreement dated February 3, 2022. SEIL treated these supplies as exports of goods, being zero-rated under Section 16 of the IGST Act, 2017, and accordingly filed refund applications under Section 54 of the CGST Act for accumulated ITC for multiple tax periods starting from March 2019. The GST department partially rejected SEIL’s refund claims on two principal grounds. Firstly, electricity supplied to PTC, an Indian entity, constituted a domestic supply and not an export, and therefore its turnover had to be excluded from zero-rated supplies while computing refunds under Rule 89(4) of the CGST Rules. Secondly, amounts received towards reimbursement of transmission charges could not be included in the zero-rated turnover. The appellate authority upheld these findings, forcing SEIL to approach the High Court directly, particularly since the GST Appellate Tribunal was not functional, leaving the company without an effective statutory remedy. The central question before the High Court was whether electricity supplied by SEIL to Bangladesh—even when routed through PTC—could be treated as a zero-rated export supply, thereby entitling the company to refund of input tax credit under GST law. SEIL contended that the contractual framework clearly established that electricity supplied to PTC was exclusively meant for Bangladesh, and PTC acted merely as a conduit. The power purchase agreements, amendment agreements, and minutes of joint meetings between SEIL, PTC and BPDB created a direct and inextricable link between SEIL and the foreign buyer. The contracts were so interdependent that they effectively formed a single integrated transaction, resulting in export of electricity. Under Section 2(5) of the IGST Act, “export of goods” simply requires goods to be taken out of India, without importing the restrictive principles developed under the Central Sales Tax (CST) regime. The department argued that the point of delivery of electricity under the agreements was located within India, and therefore the supply to PTC was completed domestically; Only the final supply that directly occasions export qualifies as zero-rated, relying on constitutional and CST-era jurisprudence, particularly the Supreme Court’s ruling in Md. Serajuddin v. State of Orissa. Supplies to PTC were independent domestic transactions and could not be treated as exports merely because the electricity eventually crossed the border. After an extensive examination of constitutional provisions, CST jurisprudence, and the scheme of the IGST Act, the High Court ruled in favour of the petitioner. The Bench held that the real test is whether the supply occasions the movement of goods out of India. The supply of electricity by SEIL was inextricably linked to and destined for Bangladesh, leaving no scope for diversion or domestic consumption. The contractual arrangements demonstrated a clear nexus between SEIL and the foreign buyer, even though an intermediary (PTC) was involved. The principles developed under Section 5 of the CST Act cannot be mechanically applied to GST exports, particularly when the IGST Act independently defines “export of goods.” The Court emphasised that the substance of the transaction, and not merely its form, must prevail while determining eligibility for zero-rated treatment. The High Court Set aside the impugned orders passed by the adjudicating and appellate authorities. The court held that SEIL’s supplies of electricity to Bangladesh, including those routed through PTC, qualify as zero-rated supplies; and directed the GST authorities to recompute and grant refunds of eligible input tax credit, along with applicable interest as per law. Case Details Case Title: M/s. SEIL Energy India Limited Versus The Principal Commissioner of Central Tax Case No.: W.P.No.21938 of 2024 Date: 30/12/2025 Counsel For Petitioner: Raghavan Ramabhadran Counsel For Respondent: Y.N. Vivekananda Click Here To Read Order Read More: Rajasthan HC Refuses Writ Against GST Section 74 Proceedings, Directs Assessee to Avail Statutory Appeal

Electricity Supplied via Indian Intermediary to Foreign Buyer Qualifies as Zero-Rated Export for GST Refund: AP High Court

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Electricity Supplied via Indian Intermediary to Foreign Buyer Qualifies as Zero-Rated Export for GST Refund: AP High Court

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