ITC Refund Allowed to 100% EOU for Zero-Rated Exports | HC

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EOU for zero-rated exports

Case Details: Shah Paperplast Industries Ltd. vs. Union of India [2025] 180 taxmann.com 582 (Gujarat)

Judiciary and Counsel Details

  • Bhargav D. Karia & Pranav Trivedi, JJ.
  • Uchit N Sheth for the Petitioner.
  • Ms Hetvi H Sancheti for the Respondent.

Facts of the Case

The petitioner was a 100% Export Oriented Undertaking (EOU), engaged in the manufacture and export of Tissue Paper, Wrapping Paper, Disposable Plastic Products, etc. It purchased raw materials from the registered suppliers under the GST Act, which was used to manufacture the finished products for export. Petitioner filed refund application under Section 54 of the GST Act read with Rule 89(4) of the GST Rules. The supplier of the goods to the petitioner did not avail the input tax credit, and the refund was sanctioned by the authorised officer. The order was passed under section 107(2) of the Act, and the refund sanction order was reviewed on the ground that the petitioner is 100% EOU and eligible to file a refund claim under Rule 89(1) or Rule 89(4A) of the GST Rules. Aggrieved by the order, the petitioner filed a writ petition to the Gujarat High Court.

High Court Held

The High Court held that the petitioner had not claimed any refund of the input tax credit on the deemed export supply. The petitioners were exporters of the finished goods, and the refund claim was filed by the petitioners being 100% EOU of zero-rated supply without payment of tax. The petitioners were not deemed exporters but were exporters of the goods, resulting in zero-rated supply as per section 16(1) of the IGST Act. Since the petitioners had exported the goods, they were entitled to a refund of the unutilised input tax credit as per the provisions of section 54(3) of the GST Act read with Rule 89(4) of the GST Rules. The petitioners were not governed by para no. 2.2 of the Circular dated 06.07.2022. When the petitioners were 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. Therefore, the reasonings assigned by the appellate authority for the applicability of Rule 89(4A) of the GST Rules were also contrary to the provisions of the GST Act. The petitions were to be allowed, and the respondents were not justified in disallowing the refund claims of the petitioners.

List of Cases Referred to

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Author: Taxmann

Taxmann Publications has a dedicated in-house Research & Editorial Team. This team consists of a team of Chartered Accountants, Company Secretaries, and Lawyers. This team works under the guidance and supervision of editor-in-chief Mr Rakesh Bhargava.

The Research and Editorial Team is responsible for developing reliable and accurate content for the readers. The team follows the six-sigma approach to achieve the benchmark of zero error in its publications and research platforms. The team ensures that the following publication guidelines are thoroughly followed while developing the content:

  • The statutory material is obtained only from the authorized and reliable sources
  • All the latest developments in the judicial and legislative fields are covered
  • Prepare the analytical write-ups on current, controversial, and important issues to help the readers to understand the concept and its implications
  • Every content published by Taxmann is complete, accurate and lucid
  • All evidence-based statements are supported with proper reference to Section, Circular No., Notification No. or citations
  • The golden rules of grammar, style and consistency are thoroughly followed
  • Font and size that's easy to read and remain consistent across all imprint and digital publications are applied