GST Refund Rejection Set Aside and Matter Remanded for Fresh Decision: Telangana High Court

Aurobindo Pharma Limited Vs State of Telangana (Telangana High Court)

The batch of writ petitions challenged the rejection of refund claims relating to tax paid on zero-rated supplies for different tax periods. The petitions covered refund claims for October 2020, February 2021, November 2021, August 2022, January 2023 and June 2023 against respective Orders-in-Original and Orders-in-Appeal. The High Court noted that, in an earlier batch of writ petitions involving the same petitioner, a Division Bench had considered an identical issue. In that case, it was recorded that the respondent State, relying on the Gujarat High Court decisions in Atul Limited and Patson Papers Private Limited, was inclined to reconsider the matter. The earlier Division Bench had observed that, without further examining the legal position, the impugned Order-in-Original and appellate order were set aside and the matter was remanded to the original authority for a fresh decision in accordance with law after providing an opportunity of hearing within four months. As both parties agreed that the issue involved in the present batch was identical and concerned the same assessee, the High Court followed the earlier Division Bench decision, allowed the writ petitions, remanded the matters to the original authority for fresh decision in accordance with law after giving the petitioner an opportunity of hearing, and directed that the exercise be completed within four months. No order as to costs was made, and pending miscellaneous applications stood closed.

Cases Discussed

• Aurobindo Pharma Limited v. State of Telangana, 2025 181 taxmann.com 704 (Telangana).
• Atul Limited and another v. Union of India and others, 2025 (7) TMI 1768.
• Patson Papers Private Limited v. Union of India and others, 2025 (6) TMI 1343.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. Kailash Nath P S S, learned counsel for the petitioner and learned Special Government Pleader for State Taxes for respondents. Perused the record.

2. These are the batch of writ petitions which have been filed challenging the rejection of the claim for refund of tax paid against on zero rated supply for different periods.

3. The relevant details in respect of which the petitioner filed individual writ petitions indicating the tax period, the amount of refund claim, the date of Order-In-Original and the date of Order-In-Appeal are furnished in the form of tabulation chart hereinunder:

4. Recently, the Division Bench of this High Court headed by the Hon’ble The Chief Justice had taken up an identical matter in respect of the very same petitioner i.e., Aurobindo Pharma Limited v. State of Telangana¹, wherein the Division Bench has in paragraph Nos.9 to 11 has held as under:

9. The matters have been taken up today. However, at the outset, learned counsel for the respondent State, on instructions, submits that the position in law has been clarified by the Division Bench judgment of Gujarat High Court in the case of Atul Limited and another v. Union of India and others². The Gujarat High Court in the case of refund of unutilized ITC as against zero-rated supply of compensation cess paid, held that the petitioner in such cases can claim refund of the cess paid on purchase of coal used for manufacturing of goods exported being zero-rated supplies. The petitioner may have paid the IGST on the goods exported by it, but it was not required to pay any compensation cess as the goods manufactured by the petitioner are exempted from the levy of tax. In such a scenario, the law laid down in the case of Patson Papers Private Limited v. Union of India and others³ would squarely apply to the facts of the present case. The case of Patson Papers Private Limited (supra) related to the manufacture of dyes and there was purchase of coal in the manufacturing process. It was involved in production of finished goods which was not liable to GST. Finished goods were exported being zero-rated supply. It is submitted that in the light of the ratio rendered by the Gujarat High Court, the department is inclined to reconsider the matter.

10. Learned counsel for the petitioner submits that in the present case, position in law would remain the same as the coal is used as an input for manufacturing purposes undertaken by the petitioner the final product of which is exported. These exports are to the SEZ and are exempted from levy of tax. If that be the case, the stand of the respondent department to reject the refund of accumulated unutilized cess but not required to be used for making zero-rated supplies which are non-taxable supplies was not proper. Learned counsel for the petitioner further submits that the judgment in case of Patson Papers Private Limited (supra) was carried to the Hon’ble Supreme Court by the Revenue and the Special Leave Petition was dismissed.

11. We have heard the learned counsel for the parties and taken note of the material facts and the relevant provisions of the Cess Act, CGST Act and IGST Act and the Rules prescribed thereunder. Without further dilating on the position in law as it has been well laid down in the cases of Patson Papers Private Limited (supra) and Atul Limited (supra), since the department is inclined to reconsider the matter in the light of the decisions referred to hereinabove, the impugned Order-In-Original and the appellate order are set aside. The matter is remanded to the original authority to take a fresh decision in accordance with law after opportunity of hearing to the petitioner within a period of four (4) months.

5. Today, when the matter is taken up for hearing, the learned counsel for the petitioner as also the learned counsel for the respondents do not dispute the fact that the issue involved in these writ petitions is identical which is already disposed of in respect of the very same petitioner in a batch of writ petitions.

6. Given the said fact that the Division Bench of this Court in identical set of facts in respect of the very same assessee have allowed the writ petitions and have remanded the matter back to the original authority to take a fresh decision, in accordance with law, after giving an opportunity of hearing to the petitioner as has been directed in the other batch of writ petitions. Let the present batch of matters also be decided within a period of four (04) months in accordance with law, after giving an opportunity of hearing to the petitioner.

7. Accordingly, these writ petitions are allowed with the above direction. No order as to costs.

Miscellaneous applications pending, if any, shall stand closed.

Notes:

¹ 2025 181 taxmann.com 704 (Telangana)

² 2025 (7) TMI 1768

³ 2025 (6) TMI 1343