The Madras High Court has set aside an order rejecting a special economic zone (SEZ) unit’s GST refund claim on the ground that only a supplier making supplies to an SEZ can apply for a refund.
The bench of Justice Ramamoorthy directed the tax authorities to process the unit’s application within two months of receiving a copy of its order.
The appellant company had challenged both the original order dated November 9, 2023, and the appellate order dated February 13, 2024.
The tax authorities took the view that Section 16 of the IGST Act, Section 54 of the CGST Act and Rule 89 of the CGST Rules, read together, permit a supplier making supplies to an SEZ unit to seek a refund, but do not permit the SEZ unit itself to claim a refund of unutilised input tax credit (ITC).
That interpretation was the central issue before Justice Senthilkumar Ramamoorthy. The company argued that the High Court had already decided the same legal question in Platinum Holdings Private Limited v. Additional Commissioner of GST & Central Excise, and had reaffirmed that position in Urjita Electronics Pvt. Ltd. v. Joint Commissioner GST & CE.
The department informed the court that it had filed a writ appeal against the Platinum Holdings judgment. It also acknowledged that no interim order had been obtained in that appeal.
The court followed its earlier decisions. In Platinum Holdings, the High Court had held that Rule 89(1) does not restrict refund applications to suppliers alone. Although another part of Rule 89 refers to a supplier making supplies to an SEZ, that reference does not, by itself, exclude other eligible applicants. The court had also rejected the Revenue’s interpretation that effectively read an additional restriction into the rule.
Finding no reason to depart from that reasoning, Justice Ramamoorthy set aside the challenged order and directed the authorities to process McKinsey’s refund application in accordance with the judgments cited in the order.
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