Case Law Details
Cognizant Technology Solutions India Private Limited Vs Assistant Commissioner of State Taxes (Telangana High Court)
Telangana High Court Directs Cognizant to Pursue Statutory Appeal Against Rejection of SEZ IGST Refund Claim
The Telangana High Court declined to entertain a writ petition challenging the rejection of an IGST refund claim of over ₹13.09 crore filed by an SEZ unit in respect of group health insurance services. Holding that the dispute involved questions on the merits of the refund claim, the Court relegated the petitioner to the statutory appellate remedy and directed that any delay in filing the appeal be considered sympathetically in view of the pendency of the writ proceedings.
Introduction
In M/s. Cognizant Technology Solutions India Private Limited v. Assistant Commissioner of State Taxes & Others, the Telangana High Court examined whether a challenge to the rejection of an SEZ refund claim could be entertained in writ jurisdiction when an efficacious appellate remedy was available under the GST law.
Facts of the Case
The petitioner, an SEZ unit, challenged a refund rejection order dated 08.12.2025 denying its claim for refund of IGST amounting to ₹13,09,78,306/- paid on group health insurance services availed during November and December 2023. The petitioner contended that the refund sanctioning authority had erroneously treated the claim as one relating to zero-rated supplies and had wrongly characterized the insurance services as being for personal consumption.
Petitioner’s Contentions
The petitioner argued that the tax incidence had been borne by it and that the services formed part of the approved list of SEZ services used for authorized operations. It was further contended that the refund order relied upon grounds not mentioned in the show cause notice, thereby denying a proper opportunity of hearing.
Revenue’s Stand
The State Tax Department raised the preliminary objection of availability of an alternative statutory remedy, submitting that all factual and legal issues could appropriately be examined by the appellate authority.
Court’s Observations
The Court observed that the controversy involved adjudication on the nature of the refund claim and the applicability of the provisions governing SEZ refunds—issues best left to the appellate forum for a decision on merits.
Final Decision
The writ petition was disposed of with liberty to the petitioner to file a statutory appeal within two weeks. The appellate authority was directed to consider any delay in filing the appeal, keeping in view the time spent by the petitioner in pursuing the writ remedy.
Key Takeaways
1. Disputes involving the merits of GST refund claims are ordinarily to be decided by the appellate authorities.
2. SEZ refund controversies involving characterization of supplies and authorized operations require factual examination.
3. Time spent in bona fide writ proceedings may be considered while deciding applications for condonation of delay.
Conclusion
The ruling reiterates the consistent judicial approach of requiring taxpayers to exhaust statutory remedies before invoking writ jurisdiction, especially where the dispute involves factual and legal issues requiring detailed examination by the appellate authority.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. Raghavan Ramabadran, learned counsel representing Mr. Lakshmi Kumaran Sridharan, learned counsel for the petitioner, and Mr. Swaroop Gorilla, learned Special Government Pleader appearing for State Tax.
2. The writ petition has been preferred assailing the refund rejection order dated 08.12.2025 rejecting petitioner’s claim for refund of Integrated Goods and Services Tax (IGST) amount of Rs.13,09,78,306/- on Group Health Insurance Services availed by Special Economic Zone (SEZ) Unit. Out of the number of grounds taken by the petitioner one of them is that the Refund Sanctioning Officer erroneously denied the refund to the petitioner SEZ Unit despite Section 16 of the Integrated Goods and Services Tax Act, 2017 and Section 54 of the Central Goods and Services Tax Act, 2017 for getting refund where the tax incidence has been borne by the recipient. The Refund Sanctioning Authority has confused the claim of refund as being under zero-rated supplies falling within the SEZ. Whereas, the petitioner’s claim is purely a refund against supplies made. The authority has wrongly treated Group Health Insurance Services as personal consumption overlooking that such services are covered under the approved default list of SEZ services and were procured for employees welfare essential to IT/ITeS operations and also fall within the authorised operations of the SEZ Unit. The officer has introduced new grounds which were never raised in the show cause notice denying petitioner an opportunity to respond. Therefore, petitioner has preferred this writ petition taking inter alia a number of grounds. The claim relates to the period November, 2023 to December, 2023. The application for endorsement of the SEZ GST Officer has been kept pending which is another handicap for the petitioner to establish its claim before the Refund Sanctioning Authority. Therefore, this Court may entertain this writ petition.
3. Learned Special Government Pleader for State Tax has at the outset taken the plea of alternative remedy of appeal. He submits that all these grounds are available to be raised before the appellate authority. The grounds urged by the petitioner are in relation to the merits of the claim whether it falls under supplies made to the insurance authorities or were to be treated as zero-rated supplies in respect of a unit falling in the SEZ zone. The appellate authority would be in a better position to examine the rival claims.
4. We have considered the submissions of the learned counsel for the parties and taken note of the relevant materials referred to and placed on record.
5. In the facts and circumstances noted above, whether the claim for refund made by the petitioner, which is a SEZ Unit, is outside the scope of zero-rated supply and is a simplicitor claim of refund against supplies made to the insurance company are matters which can be properly raised and decided by the appellate authority on merits. Therefore, we are not inclined to entertain the writ petition at this stage. The petitioner may avail the remedy of appeal taking all such grounds of law and fact as are available to it. Needless to say, if an appeal is filed within a period of two weeks, the appellate authority would consider the question of delay, if any, taking into account that the petitioner was pursuing its remedy before this Court in writ jurisdiction against the refund rejection order dated 08.12.2025.
6. The writ petition is accordingly disposed of. No order as to costs. Miscellaneous applications pending, if any, shall stand closed.
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