Shah Paperplast Industries Ltd. & Anr. Vs Union of India & Ors. (Gujarat High Court)
Gujarat High Court held that petitioner being 100% EOU of zero-rated supply without payment of tax is entitled for refund of unutilized ITC. Since petitioner is not deemed exporter para no.2.2 of clarificatory Circular No.172/04/2022-GST dated 06.07.2022 would not be applicable.
Facts- The petitioners are engaged in the business of manufacture and export of Tissue Paper, Wrapping Paper, Disposable Plastic Products. etc. being 100% Export Oriented Undertaking (EOU). The present petition has been filed mainly contesting against denial of refund of tax in view of Circular No.172/04/2022-GST dated 06.07.2022 issued under section 168 of the Central Goods and Service Tax Act, 2017. Notably, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 172/04/2022-GST dated 06.07.2022 wherein it was provided in para 2.2 that in case of deemed export, the tax paid would not be considered as input tax credit and therefore, same would not be considered while calculating the refund under Rule 89(4) or Rule 89(5) of the GST Rules.
Conclusion- It appears that the respondents have lost sight of the fact that the petitioners are the exporters of the finished goods and the refund claim is filed by the petitioners being 100% EOU of zero-rated supply without payment of tax. The petitioners are therefore, not governed by para no. 2.2 of the Circular dated 06.07.2022. Had the suppliers of the raw materials to the petitioners claimed the refund being the deemed exporters regarding input tax credit paid on such deemed export supplies, then the clarificatory circular dated 06.07.2022 would have been applicable. When the petitioners are not the deemed export suppliers, Rule 89(4A) would also not be applicable to the petitioners as Rule 89(4A) has been omitted by the Central Goods and Services Tax (Second Amendment) Rules, 2024 with effect from 08.10.2024.
