SEZ Units Eligible for GST Refund on Zero-Rated Supplies | HC

Case Details: Urjita Electronics (P.) Ltd. vs. Joint Commissioner of GST and Central Excise - [2025] 173 taxmann.com 756 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• N. Murali, for the Petitioner.
• Rajendran Raghavan, Senior Standing Counsel for the Respondent.

Facts of the Case

The petitioner, a unit located in a Special Economic Zone (SEZ), is engaged in the manufacture of radio frequency equipment. Due to the petitioner’s SEZ status not being correctly reflected on the GST portal, domestic suppliers treated the supplies as regular taxable transactions and paid GST on them. The petitioner, having borne the tax cost on these zero-rated supplies, filed refund claims under Section 54 of the CGST Act read with Rule 89 of the CGST Rules, asserting that the tax was paid by mistake by the suppliers and the petitioner should not be burdened. The refund claims were rejected through separate Orders-in-Original, citing that under Rule 89(1) and Rule 89(2)(f) of the CGST Rules, only the supplier—not the SEZ recipient—is entitled to claim such refund. The appellate authority upheld these rejections via a common order, further observing that the petitioner failed to provide evidence that its suppliers had not already claimed refunds on the same supplies. Challenging this, the petitioner approached the Madras High Court asserting entitlement to refund on tax borne by it for zero-rated supplies.

High Court Held

The Hon’ble Madras High Court held that SEZ units are entitled to refund of tax paid on zero-rated supplies where the tax was borne by them and not claimed by suppliers. It clarified that neither Section 54 of the CGST Act nor Rule 89 restricts such refund, provided the SEZ unit furnishes declarations from suppliers confirming non-availment of ITC or refund. The appellate orders were set aside and the matter remanded for fresh consideration in accordance with law, with direction to grant refund along with applicable interest.

List of Cases Referred to

• M/s.ATC Tires Private Limited, Represented by its Authorised Signatory v. Joint Commissioner of GST & Central Excise (Appeals), Madurai and another (para 7)
• ATC Tires Private Limited v. The Joint Commissioner of GST & Central Excise (Appeals-II) and another 2022 (4) TMI 1194 (para 25)
• Platinum Holdings Private Limited v. Additional Commissioner of GST and Central Excise (Appeals-II) 2021 (10) TMI 630 (para 25)
• Thryve Digital LLP v. The Joint Commissioner (Appeals-II) and others 2023 (12) TMI 594 (para 25).