The Madras High court while allowing the refund of Goods and Service Tax (GST) to the Special Economic Zone (SEZ) held that any entities can file for Refund under section 54 of CGST Act.
The petitioner is a Special Economic Zone (SEZ) and has affected purchases from several suppliers/vendors for the development of the SEZ. The petitioner has sought for refund of taxes paid under the Central Goods and Services Tax Act, 2017, State Goods and Services Tax Act, 2017 and Integrated Goods and Services Tax Act, 2017.
The Petitioner had filed applications for refund of the taxes erroneously remitted by it on various dates to its suppliers. A show cause notice was issued where the locus of the Petitioner to claim the refund was questioned on ground that as per Section 54 of the CGST Act read with Rule 89 of CGST Rules, only a supplier of services would be entitled to claim refund and not the SEZ itself.
The Petitioner contended that it had committed an error by remitting the taxes on the supplies made to it as the supplies being made to it were zero rated supplies exempt from tax. It was further contended that the reference in Section 54 of the CGST Act to ‘any person’ and would include the SEZ as well and accordingly, it shall be entitled to claim the refund of erroneously remitted tax.
The single judge bench of justice Anitha Sumanth held that the statutory scheme for refund under the CGST Act and State GST Acts, permits any entity to seek a refund of taxes, including an SEZ. It was observed that the provisions of Section 54 of the CGST Act, providing for a refund, apply to any person who claims such refund and who makes an application for the grant of the same. Thus, it was held that in the present case, the Petitioner shall fall within the meaning of ‘any person’ as enumerated under Section 54 of the CGST Act and accordingly, shall be eligible to seek refund of the taxes paid by it.
“Thus, on a combined reading of Section 54 and Rule 89, the restriction which has been read into the provision by the Revenue is, in my view, misplaced. In fact, the Officer in the impugned order proceeds on the basis that the second proviso to Rule 89 deploys the word ‘only‘, which I do not find in the second proviso. It is a settled position that there can be no insertion of a word or phrase in a statutory provision or in a Rule which must be read and applied, as framed. No restrictions or amplifications of the Rule are permissible by interpretation. On the legal issue of entitlement to refund, I hold in favor of the petitioner,” the court said.
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