Supreme Court Upholds ₹2.9 Crore GST Refund to SAIL on Unutilised ITC of Coal [Read Order]

The Supreme Court of India has upheld the Jharkhand High Court order granting GSTrefund of ₹2.9 crore to Steel Authority of India Limited (SAIL) on unutilised input tax credit of compensation cess paid on coal.

The case arose from a Jharkhand High Court judgment in favour of SAIL, a government company engaged in manufacture of iron and steel. SAIL had filed a refund application on 4 March 2019 for the period July 2017 to March 2018 for refund of unutilised ITC accumulated on exports made without payment of tax.

After seeking clarifications, the tax department informed SAIL through email and GST portal in October 2019 that the refund was sanctioned and only payment advice was pending. Even after this, no refund amount was released. After more than two years, the department informed SAIL that the refund was rejected by an order dated 18 October 2019 and the ITC amount was re-credited to the electronic credit ledger.

SAIL approached the High Court stating that no rejection order was ever served and that no hearing was given. The department later admitted before the High Court that the alleged rejection order was not available in official records.

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The Jharkhand High Court observed that there was no valid order rejecting the refund and that the department had taken contradictory stands. The court explained that asking SAIL to file a fresh refund application would result in loss of statutory interest. The High Court directed the department to process the original refund claim and pay refund with interest at 6%.

The State of Jharkhand challenged the order before the Supreme Court.

A Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan observed that there was a gross delay of 676 days in filing the appeal, which was not properly explained. The Bench also observed that no good reason existed to interfere with the High Court order on merits.

The Supreme Court dismissed the State’s appeal on grounds of delay and merits, while keeping the question of law on interest open. The Jharkhand High Court order granting GST refund to SAIL stands confirmed.

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