No Advance Ruling on matter, which already agreed upon by applicant at the time of hearing

In re Arima Minerals And Metals Private Limited (GST AAR Andhra Pradesh)

The case of In re Arima Minerals And Metals Private Limited (GST AAR Andhra Pradesh) revolves around the application for an Advance Ruling under the Central Goods and Services Tax Act, 2017 (CGST Act) and the Andhra Pradesh Goods and Services Tax Act, 2017 (APGST Act) by M/s Arima Minerals And Metals Private Limited (“the applicant”), a SEZ unit engaged in the export of goods under a Letter of Undertaking without payment of IGST.

Background and Questions Raised

The applicant sought clarification on various aspects of Input Tax Credit (ITC) refund under the IGST Act, including eligibility criteria under sections 16(1) and 16(3)(a), the application of Rule 89 of the CGST/APGST Act concerning tax collection and ITC pass-through to SEZ units, the refundability of unutilized ITC on zero-rated supplies, the SEZ unit’s classification as a supplier under Rule 89(1)(a), and the potential impact of recent judicial rulings like the Gujarat High Court decision on their refund claims.

Proceedings and Findings

1. Jurisdictional Concerns: The application was forwarded to the jurisdictional officer, who issued deficiency memos under Rule 90(3) of CGST/APGST Act against the refund applications. This indicated discrepancies between the application’s stated purpose and the questions raised therein.
2. Virtual Hearing and Agreement: A virtual hearing was conducted where the applicant’s representative reiterated the submissions. It was noted that the issues raised in the application were also the subject of actions initiated by the jurisdictional officer, which the applicant agreed upon during the hearing.
3. Legal Considerations: The authority, in accordance with Section 98(2) of the Act, decided not to admit the application for Advance Ruling. This section prohibits admission of applications where the question raised is already pending or decided in any proceedings under the Act. Since the applicant had agreed upon the matter during the hearing with the jurisdictional officer, the application was rejected on procedural grounds.

The ruling emphasizes procedural adherence under the GST Acts, particularly regarding the admissibility of Advance Rulings when the applicant has already agreed upon the matter in question during prior proceedings. Despite the substantive issues raised regarding ITC refunds for SEZ units, the rejection was based on the procedural grounds outlined in Section 98(2), which bars the admission of applications where the subject matter has been agreed upon previously.

FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, ANDHRA PRADESH

(Under sub-section (4) of Section 98 of Central Goods and Services Tax Act, 2017 and sub-section (4) of Section 98 of Andhra Pradesh Goods and Services Tax Act, 2017)

1. At the outset we would like to make it clear that the provisions of Central Goods & Services Tax Act, 2017 and SGST Act, 2017 are in parimateria and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the APGST

2. The present application has been filed u/s 97 of the Central Goods & Services Tax Act, 2017 and Al’ Goods & Services Tax Act, 2017 (hereinafter referred to CGST Act and APGST Act respectively) by M/s. Arima Minerals And Metals Private Limited . (hereinafter referred to as applicant), registered under the AP Goods & Services Tax Act, 2017.

3. Brief Facts of the case:

M/s Arima Minerals and Metals Private Limited. (hereinafter referred to as “applicant”) is engaged the export of goods under Letter of Undertaking [Without payment of IGST] from the SEZ unit. Applicant is having GST registration number: ³7AAQCA9407N1ZX.

The company has received the supplies from Non SEZ Suppliers and wherein supplier has charged the Integrated Good and Service Tax [IGST] and passed the credit in GSTR -2A. Based on the GSTR-2A, eligible credit was availed in the respective monthly GST Returns. Being a SEZ unit, unable to utilize the ITC lying in the electronic credit ledger, because the company engaged in export of goods without payment of IGST.

The company making following types of outward supplies,

• Export of Goods [Outside the country]
• Supplies to SEZ [Inter SEZ Supplies]
• Supplies to DTA

4. Questions raised before the authority:

The applicant seeks advance ruling on the following:

1. Rate of GST Are we eligible for refund of ITC under section 16(1) and 16(3)(a) of the IGST Act?

2. Refund officer referred rule 89 of CGST/APGST Act by stating that supplier to SEZ unit to file the refund application and not the recipient. Will this rule applies even when the tax was collected by the supplier and ITC passed on. If the supplier claim the refund, will it not lead to dual benefit to the supplier, by both collecting the GST from the recipient and claiming the refund of GST?

3. Can we claim the refund of unutilized input tax credits in this scenario? [By applying the Zero rating of tax in the case of SEZ?

4. As per rule 89(1)(a) of CGST/APGST Act and View-1, The refund officer not treating the SEZ unit (claimant) as a supplier to SEZ. Is this view is right?

5. Can the refund claim be sanctioned in the same line as per recent Gujarat High Court decision dated 03/02/2023 in M/s SE Forge Limited Vs Union of India?

6. Enlighten the appropriate section and rule to file the refund application without rejection by the officer again.

On verification of basic Information of the applicant, It: Is observed that the applicant is under state jurisdiction i.e, Gajuwaka Circle , Visakhapatnam -11 division . Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. In response, remarks arc received
from the State jurisdictional officer concerned.

5. Applicant’s Interpretation of Law:

1. Considering the facts and law,

2. From the above table, company is making Zero-rated supply so eligible to claim the refund as per Section 16(3)(a) of IGST Act

3. Based on this section we filed the refund application in GST portal under the option “Refund of ITC on Export of goods and services without payment of tax”

4. Refund processing officer has issued the deficiency memo by stating that, “As per the registration details in the BOWEB Portal the registration type is SEZ. The supply of goods or services or both to a SEZ unit/Developer comes under zero rated supply in terms of Section 16 of IGST Act,2017. In case of zero-rated supply to SEZ unit, the application for refund shall be filed by the supplier to SEZ UNIT but not recipient to SEZ unit in terms of Rule 89 of APGST/CGST Acts, 2017”

View-1

5. The company is making supply to SEZ unit as well as exporting goods outside India, hence this is Zero-rated supply as per section 16(1)(a) of IGST Act and we become supplier as per Rule 89 for the portion of the supplies made to SEZ units, which was not considered by the proper officer [Claiming as Supplier]

View-2

6. The company is registered as SEZ unit, hence supplies to SEZ is zero rated supply and not liable pay IGST on purchase from the DTA units. But supplier charged IGST, collected the Invoice amount including GST and passed the Credit in GSTR-2A, hence eligible credit claimed In GST11-313. Since Zero-rated supply, without payment of IGST under the Letter of Undertaking, the credit. remained unutilised and eligible for refund as per Section 16(3) of IGST Act. The refund processing officer rejected the claim staling that., being SEZ unit., refund application to be filed by the supplier to SEZ not recipient. This statement can be applied only when the Supplier to SE7 has not passed on the credit. to us, Rule 89 was applied without seeing the transaction in total.

7. CGST Act does not make any distinction between a SEZ unit and other registered persons so far as eligibility of ITC is concerned. SEZ is not an exclusion under the framework of GST scheme. There is no express denial of refund of output tax or ITC to a SEZ under Section 54. Therefore, the averment that since the supply to SEZ unit is a zero rated, the units situated in SEZ are not eligible for refund under Section 54 of the Act is not sustainable.

6. Virtual Hearing:

The proceedings of Virtual Hearing were conducted on 20.02.2024, for which the authorized representative, K. Chitra C.A, attended and reiterated the submissions already made.

7. Discussion and Findings:

We have examined the issues raised in the application in light of the facts and arguments submitted by the applicant. We have considered the submissions made by the applicant in their application for Advance Ruling. We have considered the issues involved from which advance ruling is sought by the applicant and the relevant facts along with arguments made by the applicant and also their submissions made during the time of the personal hearing.

As per the remarks submitted by the Assistant Commissioner (ST) Gajuwaka, Circle Visakhapatnam —II Division, the Deficiency Memos in RFD-03 have been issued under Rule 90 (3) of CGST / APGST Act, 2017 against their refund applications.

While filling the column 13 in the application regarding the Advance Ruling type, the applicant has ticked the box corresponding to ‘admissibility of Input Tax Credit tax paid or deemed to have been paid. In contrary to the above, as seen from their questions in the application it is noticed that they are seeking clarification in respect of the eligibility of the refund claim. Section 97 (2) of CGST/APGST Act does not cover the rejected proceedings on which Advance Ruling can be sought.

The under signed authority on taking cognizance of the deficiency memos issued by the jurisdictional officer i.e AC (ST) Gajuwaka Circle, Visakhapatnam -II

Division, against the appellant company on the subject 14que, It 14 apparent that proceedings are issued against the applicant on the Grime subject which wag raised In the application on the date of filling of Advance ruling ARA-01 i. e on 03.02.2024 and the same was agreed by the appellant in the hearing.

Before deciding the questions on merit, the question of admissibility or otherwise of the application is to be decided In view of the actions initiated by the jurisdictional officer on the subject issue.

The attention of the applicant is invited to the section 98 (2) where, It reads as follows:

Section 98 Procedure on receipt of application:

(2) The authority may, after examining the application and the records called for and after hearing the applicant or his authorized representative and the concerned officer or his authorised representative, by order, either admit or reject the application:

Provided That the Authority shall not admit the application where the question raised in the application is already pending or decided in any proceedings in the case of an applicant under any of the provision of the Act;

Provided Further that no application shall be rejected under this sub-section unless an opportunity of hearing has been given to the applicant:

Provided also that where the application is rejected, the reason for such rejection shall be specified in the order.

In view of the above discussion, virtual hearing held, legal provision of the act, and as the action has been initiated by the proper officer on the same subject matter, which has been agreed upon by the applicant at the time of hearing which is now present before the undersigned authority, it is felt that the subject application is liable to be rejected under section 98 of the Act.

Accordingly, the application is hereby “Rejected” as discussed supra.