Summary / Headnotes
Held - Where Input Service Distributor (ISD) distributes input tax credit to an SEZ unit, the supplier of services cannot claim refund of such distributed credit under Rule 89, as the supplier does not hold the distributed ITC. Consequently, the SEZ unit, being the recipient of the distributed credit and having exported goods under LUT without payment of tax, was entitled to claim refund of the unutilised ITC. While dismissing the SLP in the peculiar facts of the case and having regard to the amount involved, the Court kept the question of law open. (Paras 3 and 4).
Petition dismissed/In favour of assessee
AI Summary of the Case
Question Answered
Issue 1: Whether an SEZ unit is entitled to claim refund of unutilised ITC distributed through an Input Service Distributor (ISD), or whether such refund can be claimed only by the supplier of goods or services.
Views: SLP dismissed. In the peculiar facts of the case, no interference was warranted with the High Court's view that where ITC is distributed through an ISD, it is not possible for the supplier to claim refund of such distributed credit and, therefore, the SEZ unit is entitled to claim refund of the ITC. The question of law was, however, kept open. (Paras 3 and 4).
Issue 2: Whether Rule 89 of the CGST Rules bars an SEZ unit from claiming refund of unutilised ITC accumulated on supplies received under LUT.
Views: SLP dismissed. No interference was made with the High Court's reliance on Britannia Industries Ltd., which held that in cases involving ITC distributed through an ISD, the SEZ unit is entitled to refund of the unutilised ITC. However, the Supreme Court expressly kept the legal question open for determination in an appropriate case. (Paras 3 and 4).
Citations
- Britannia Industries Ltd. v. Union of India — 2020 (42) G.S.T.L. 3 (Guj.)
Judgment
IN THE SUPREME COURT OF INDIA
before the bench of
mr. J. B. PARDIWALA and
mr. K. V. Viswanathan, JJ.
Union of India
Versus
Meghmani Organochem Ltd.
Petition for Special Leave to Appeal (C) No. 1239 of 2025, decided on 22-9-2025
REPRESENTED BY:
Shri N. Venkataraman, A.S.G.,
Shri Gurmeet Singh Makker, AOR,
Shri V C Bharathi,
Ms. Pankhuri Srivastava,
Shri Sarthak Karol,
Shri Sushil Raaja and
Ms. Rajeshwari Shankar, Advs., for the Petitioner
[Order]. - The High Court relying on its decision rendered in the case of Britannia Industries Ltd. v. Union of India 2020 (42) G.S.T.L. 3 (Guj.) accepted the arguments canvassed on behalf of e respondent herein-original petitioner that an SEZ Unit is entitled in law to claim the refund of unutilised ITC accumulated under Rule 89 of CGST Rules on the ground that exports are made without payment of tax under LUT.
2. Mr. Chandrashekhara Bharathi, the learned counsel appearing for the revenue submitted that Britannia Industries Ltd. (supra) was challenged before this Court, however, the challenge failed on the ground of low tax effect. He would submit that it is only the supplier who could have preferred the application claiming a refund of the unutilised ITC accumulated under Rule 89 of the CGST Rules and not the SEZ Unit.
3. In the peculiar facts and circumstances of the case and having regard to the amount which has been ordered to be refunded, we are not inclined to interfere with the impugned order. However, the question of law is kept open.
4. The Special Leave Petition is, accordingly, dismissed.
5. Pending application(s), if any, stands disposed of.