Refund of unutilized input tax credit not admissible, in case of supplies regarded as deemed export supplies where procedural prescribed under Rule 89 of the CGST Rules, 2017 has not been followed.

 

Facts- The appellant having GSTIN No. 08AADCM6287B1ZG is a 100% Export Oriented Unit (hereinafter referred to as “the appellant) are engaged in business of manufacturing and exporting of Jewellery from its registered office situated at Sitapura Industrial Area, Jaipur has filed application for refund claim under Section 54 of the CGST Act, 2017 of Rs. 5,79,552/- for the period November, 2017 in respect of ITC accumulated on account of export of goods & services without payment of Integrated Tax against filing the Letter of Undertaking (hereinafter referred to as LUT). The refund claim was rejected by the adjudicating authority on the grounds that the appellant has not followed the procedure for procurement of goods from DTA units.

Held- The Learned Commissioner of GST (Appeals) held that I have carefully gone through the case records and submissions made in the appeal memorandum as well as written submission submitted by the appellant at the time of personal hearing on 13-3-2020. I find that the adjudicating authority has rejected the refund claim filed on the ground that the claimant has not followed the procedure for procurement of goods from DTA Unit and the appellant was required to give prior intimation in a prescribed proforma in Form A bearing running number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export/supplies. The question of deemed export arises as the appellant is 100% EOU and supply received by them is deemed export, therefore, the appellant had to comply with provisions of Circular No. 14/14/2017-GST, dated 6-11-2017 and other provisions for the time being in force. The deemed export refer to supplies of goods manufactured in India (and not Services) which are notified as deemed export under Section 147 of the CGST Act, 2017 and recipient EOU shall have to follow the procedure as per Circular No. 14/14/2017-GST. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in Notification No. 49/2017-Central Tax, dated 18-10-2017 are also required to be furnished which includes an undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and that no input tax credit on such supplies has been availed of by him. The undertaking should be submitted manually along with the refund claim.
Similarly, in case the refund is filed by the recipient of deemed export supplies, an undertaking by the supplier of deemed export supplies that he shall not claim the refund in respect of such supplies is also required to be furnished manually. Thus, the undertaking in both the case is to be furnished mandatorily, therefore the contention of the appellant is not acceptable. I hereby reject the appeal filed by the appellant.