GST ITC Refund Allowed Only for Direct Power Exports to Bangladesh, Not Supplies Routed Through PTC: AP HC

The Andhra Pradesh High Court has held that Input Tax credit (ITC) refund allowed only for direct power exports to Bangladesh, and not supplies routed through Power Trading Corporation of India Ltd. (PTC). The bench of Justice R. Raghunandan Rao and Justice Subhendu Samanta observed that electricity supplied by SEIL Energy Limited to the Power Trading Corporation of India (PTC), which in turn exported the power to the Bangladesh Power Development Board (BPDB), constituted a domestic supply and was therefore ineligible for zero-rated treatment under the GST law. SEIL Energy Limited is engaged in the generation and sale of electricity. As part of its operations, the company supplied electricity to BPDB under two arrangements. In the first arrangement, SEIL supplied electricity directly to BPDB pursuant to a contractual agreement. In the second arrangement, SEIL supplied electricity to PTC, a Government of India undertaking, which had entered into a separate agreement with BPDB for exporting electricity to Bangladesh. Originally, PTC had entered into a power supply agreement with M/s Meenakshi Energy Limited for supply of electricity to BPDB. However, when Meenakshi Energy was unable to meet its obligations, SEIL was substituted as the power supplier under a power purchase agreement between SEIL and PTC, while the principal export contract remained between PTC and BPDB. SEIL claimed refund of accumulated ITC under Section 16 of the Integrated Goods and Services Tax (IGST) Act, 2017, arguing that both direct supplies to BPDB and supplies made to BPDB through PTC qualified as “export of goods” and were therefore zero-rated supplies. Arguments by SEIL SEIL contended that electricity is “goods” under the GST law and that, as long as electricity physically crossed the Indian border into Bangladesh, the supply should be treated as an export. Relying on Section 2(5) of the IGST Act, which defines export of goods as “taking goods out of India,” SEIL argued that the point of sale or contractual structure should not be determinative. The company further asserted that the contractual arrangement involving SEIL, PTC, and BPDB effectively created a tripartite relationship. It relied on minutes of meetings and amendment clauses in the agreements which conferred certain rights on BPDB, including the right to terminate supply if SEIL failed to deliver electricity. According to SEIL, this established privity of contract with BPDB, even in supplies routed through PTC. Revenue’s Stand The tax authorities opposed the refund claim, arguing that SEIL’s supply to PTC was completed within India. They pointed out that under both the power purchase agreement between SEIL and PTC and the export agreement between PTC and BPDB, the delivery point of electricity was the Bohronpur sub-station in West Bengal. Since delivery occurred within India, SEIL’s transaction with PTC was a domestic supply. The Revenue also highlighted that transmission charges were separately invoiced and subjected to tax, demonstrating that the supply by SEIL to PTC was not a composite export supply. According to the authorities, it was PTC’s onward supply to BPDB that occasioned the export of electricity, not SEIL’s supply to PTC. Court’s Analysis The High Court undertook an extensive examination of constitutional provisions under Article 286, jurisprudence under the Central Sales Tax (CST) Act, and the scheme of the IGST Act. The Bench observed that under CST law, only the sale which “occasioned the export” was treated as an export sale, while penultimate sales were excluded unless specifically protected under Section 5(3) of the CST Act. Applying these principles to the GST regime, the Court noted that although Section 2(5) of the IGST Act defines export of goods as “taking goods out of India,” the foundational requirement remains that the supply must be directly and integrally linked to the movement of goods outside India. In SEIL’s case, the Court found that the supply of electricity by SEIL to PTC was completed at a delivery point within India. The export of electricity to Bangladesh was occasioned by PTC’s independent contract with BPDB. SEIL, despite being named in certain contractual documents, was not a party to the export contract between PTC and BPDB. The Bench observed that SEIL’s supply to PTC could at best be described as a supply “for export,” but not an “export of goods” in itself. The Court emphasised that only the supply which directly occasions export qualifies as an export supply under the IGST Act. Final Ruling The High Court concluded that: Electricity supplied directly by SEIL to BPDB qualifies as an export of goods and is a zero-rated supply under Section 16 of the IGST Act, entitling SEIL to refund of accumulated ITC. Electricity supplied by SEIL to PTC is a domestic supply within India and does not qualify as a zero-rated export, even though the electricity is subsequently exported by PTC to Bangladesh. Accordingly, the Court dismissed SEIL’s writ petitions seeking ITC refund on supplies made to PTC. However, it granted liberty to SEIL to resubmit its refund applications within four weeks, restricting the claim only to ITC attributable to direct supplies made to BPDB. The Court directed that, while recalculating the refund under Rule 89 of the CGST Rules, the supplies to PTC must be treated as domestic supplies and excluded from the zero-rated turnover 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

GST ITC Refund Allowed Only for Direct Power Exports to Bangladesh, Not Supplies Routed Through PTC: AP HC

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