Can SEZ Unit Claim Refund of GST Input Tax Credit on Exports?

The SEZ unit applied for refund of un-utilised ITC. Such accumulation arose on account of export of goods. The assessing authority rejected the refund claim.

According to Section 54(3) of the CGST Act, refund of unutilised ITC is allowed in case of zero-rated supplies (viz., exports) made without payment of GST. The said sub-section does not distinguish between SEZ and non-SEZ applicants.

However, according to the second proviso to Rule 89(1) of CGST Rules, the application for refund “shall” be filed by the supplier of goods / services in respect of supplies to a SEZ unit / SEZ developer.

Further, as per Rule 89(2)(f) ibid, such refund application shall be accompanied by a declaration that GST has not been collected from the SEZ unit / SEZ developer, where the refund is on account of supply of goods / services to a SEZ unit / SEZ developer.

[By the Appellate Authority – GST (Andhra Pradesh)] [1] It is evident from a conjoint reading of the above provisions that GST law facilitates refund claim to the ‘suppliers to SEZ units’ (viz., those located in DTA) with payment of GST. Hence, SEZ units / developers cannot claim refund of unutilised ITC on inward supplies from the DTA.

[1] Order No. 4990 of 2020