SUBHAJIT LEATHER WORKS vs KAMAL PUGGAL, Sanjay Bangartale

IN THE GOODS AND SERVICES TAX APPELLATE TRIBUNAL
KOLKATA BENCH
COURT NO. 1
Appeal No. APL/64/KLK/2026

SUBHAJIT LEATHER WORKS
….Appellant

Versus
KAMAL PUGGAL, JOINT COMMISSIONER CGST & CX
…Respondent


In appearance :
For the Appellant : Mr. Arup Dasgupta, Ld. Advocate
For the Respondent : Shri Samarjeet Kumar, Superintendent, CGST

CORAM :

Shri Satya Gopal Chattopadhyay : Hon’ble Judicial Member
Shri Anindya Mitra : Hon’ble Technical Member


FINAL ORDER
Date of Hearing : 08.10.2026
Date of Order : 06.11.2026


Per Anindya Mitra (TM):
[1] This appeal has been filed by M/s Subhajit Leather Works (GSTIN
19AARPH1972K1Z4), 196-E/2, Picnic Garden Road, Kasba, Kolkata, West
Bengal, 700039 under section 112(1) of CGST Act, 2017, against the
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Appellate Order passed by Joint Commissioner, CGST and CX Appeal-I
Commissionerate confirming the rejection of his refund claim.

[2] FACTS IN BRIEF
[2.1] On 28/02/2024, the appellant filled a refund application in FORM
GST RFD 01 claiming refund of Rs. 9,06,045/- for the tax period April 2021
to March 2022 “on account of supplies made to SEZ unit/SEZ Developer
(without payment of tax)”. In RFD-01, the turnover of Zero-rated supply of
goods and services was declared at Rs. 1,40,95,971.65/- the adjusted total
turnover, at Rs. 1,40,95,971 and net ITC at 9,06,045/-.

[2.2] The Proper Officer found that supplies made to SEZ unit/SEZ
Developer (without payment of tax) had nowhere been disclosed in GSTR-
1 filed for the period of claim. So, while calculating the refund amount as
per the formula in rule 89(4) of CGST rules, the zero-rated turnover of
goods had to be treated as nil. Therefore, no refund was admissible to the
tax payer.

[2.3] The taxpayer filed appeal against the rejection of his refund
application. However, the First Appellate Authority rejected the appeal.

[2.4] The First Appellate Authority noted his order:
(i) From the above discussions I find that the appellant's submissions
suffer from significant contradictions which undermine the credibility of
the refund claim. While during the Personal Hearing the appellant stated
that only one invoice pertained to SEZ supply in FY 2021-22 and the rest
were exports under LUT, their letter dated 17.10.2025 claims SEZ
supplies amounting to 1,40,95,971.65/-, indicating a substantial volume
far beyond a single invoice. Further, although the appellant now asserts
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that SEZ supplies were wrongly reported due to a columner error, the
statutory returns-GSTR-1, GSTR-3B, and GSTR-9—contain no reporting
whatsoever of SEZ supplies. Instead in Table 5A of GSTR-9 the turnover
of around Rs.3,04,50,908/- was reported as exports without payment of
tax and in Table 4C of the same return, the turnover of Rs.5,82,634/- was
reported as export with payment of tax whereas in summary of GSTR-1
of the relevant period, value of export shown as Rs.31033542/- in Table
6A. Additionally, the turnover declared in the refund application (RFD-
01) does not match any figure in the statutory returns, creating further
inconsistency. These conflicting statements and misaligned declarations
demonstrate that the appellant has failed to present a coherent,
consistent, and reliable account of the alleged SEZ supplies, thereby
weakening the basis of the refund claim.” (para 5.8)

(ii) The appellant mentioned in their letter dated 17.10.2025 that their SEZ
Supplies, amounting to 1,40,95,971.65/-, and Export Sales, amounting
to 1,69,37,571.07/-, were erroneously reported. The cumulative
turnover of Rs. 3,10,33,542.72/ was incorrectly submitted under
Column/Table 6A (Export Without Payment of Taxes) but, the appellant
did not submit any of the mandatory documents prescribed under Rule
89(2) of the CGST Rules, 2017, including copies of export invoices,
shipping bills, EGM details, SEZ endorsement, LUT/Bond, and
reconciliation statements. Further, as clarified in Circular No.
125/44/2019- GST dated 18.11.2019 and Circular No. 37/11/2018-GST
dated 15.03.2018, documentary evidence is essential to establish the
nature of supplies as "exports" or "SEZ supplies without payment of tax."
In absence of these documents, the appellant's claim cannot be
substantiated.” (para 5.9)
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On the above grounds, the First Appellate Authority upheld the order
rejecting refund.
[3] GROUNDS OF APPEAL IN THE TRIBUNAL AND THE CROSS
OBJECTION:-
[3.1] The tax payer has urged this Tribunal to set aside the impugned
appellate order and declare him entitled to the refund of ITC amounting to
Rs. 9,06,045.00/-.
[3.2] In the cross objection, the Department submitted that “these are not merely
clerical errors but substantially misclassified turnover amounting to Rs.
3,10,33,542.72, failing to report supplies to SEZS in their statutory returns namely
GSTR-1 and GSTR-9 and have sought refund for this misreported turnover. The
appellant relies heavily upon the fact that the aggregate turnover appearing in
GSTR-1, GSTR-3B and GSTR-9 is substantially consistent. The Department
respectfully submits that consistency of aggregate turnover does not by itself
establish the character of each individual supply. Therefore, reconciliation of
aggregate turnover cannot substitute verification of the individual invoices,
recipient status, nature of supply, endorsement by the Specified Officer,
export/SEZ documentation and corresponding ITC” (reply to Para V to VII)
[4] ANALYSIS AND DECISION
(4.1) We have heard the Revenue and the Counsel for the taxpayer and
perused the records.
(4.2) Before dealing with the claims, an examination of the related
statutory provisions is in order.
[5] Zero-rated supply has been defined in Section 16 of IGST Act, 2017
which reads as under:
“ 16.1 zero rated supply” means any of the following supplies of goods
or services or both, namely:-
(a) Export of goods or services or both; or
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(b) Supply of goods or services or both for authorised operations
to a Special Economic Zone developer or a Special Economic
Zone unit . (emphasis added)”
(2) Subject to the provisions of sub-section (5) of Section 17 of the Central Goods
and Services Tax Act, credit of input tax may be availed for making zero-rated
supplies, notwithstanding that such supply may be an exempt supply.
(3) A registered person making zero-rated supply shall be eligible to claim
refund of unutilised input tax credit on supply of goods or services or both,
without payment of integrated tax, under bond or Letter of Undertaking, in
accordance with the provisions of section 54 of the Central Goods and Services
Tax Act or the rules made thereunder, subject to such conditions, safeguards
and procedure as may be prescribed :
………………”
[6] The formula of quantification of refund of accumulated ITC in case of zero-
rated supply of goods or services or both is laid down in rule 89(4) of the CGST
rules, 2017 which reads as under:
“ refund of input tax credit shall be granted as per the following formula:
Refund Amount= (Turnover of zero-rated supply of goods + Turnover of zero-rated
supply of services) x Net ITC ÷ Adjusted Total Turnover
Where
(A) “Refund amount" means the maximum refund that is admissible;
(B) "Net ITC" means input tax credit availed on inputs and input services during
the relevant period;
(C) "Turnover of zero-rated supply of goods means the value of zero-rated supply
of goods made during the relevant period without payment of tax under bond or
letter of undertaking or the value which is 1.5 times the value of like goods
domestically supplied by the same or, similarly placed, supplier, as declared by the
supplier, whichever is less
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(D) "Turnover of zero-rated supply of services" means the value of zero-rated
supply of services made without payment of tax under bond or letter of
undertaking, calculated in the following manner, namely: -
Zero-rated supply of services is the aggregate of the payments received during the
relevant period for zero-rated supply of services and zero-rated supply of services
where supply has been completed for which payment had been received in
advance in any period prior to the relevant period reduced by advances received
for zero-rated supply of services for which the supply of services has not been
completed during the relevant period;
(E) "Adjusted Total Turnover" means the sum total of the value of-
(a) the turnover in a State or a Union territory, as defined under clause (112) of
section 2, excluding the turnover of services, and
(b) the turnover of zero-rated supply of services determined in terms of clause (D)
above and non-zero-rated supply of services, excluding the value of exempt
supplies other than zero-rated supplies during the relevant period
(F) “Relevant period” means the period for which the claim has been filed.
[Explanation : For the purposes of this sub-rule, the value of goods exported out of
India shall be taken as-
(i) The Free on Board (FOB) value declared in the Shipping Bill or Bill of Export
form, as the case may be, as per the Shipping Bill and Bill of Export (Forms)
Regulations, 2017; or
(ii) The value declared in tax invoice or bill of supply,
whichever is less”]
The formula contained in rule 89(4) of the CGST Rules, 2017 makes it
abundantly clear that a taxpayer needs to correctly report ‘zero rated supply’ in
the return in GSTR 3B and also provide a correct break up in the statement of
outward supply in GSTR-1.
[7] In this context, we may also note the required details of outward supplies
which a taxpayer has to disclose in statutory monthly statement of outward
supply in FORM GSTR-1. Table 6 of GSTR-1 provides details of zero-rated
supplies and deemed exports. 6A is for exports, 6B is for suppliers made SEZ
unit or SEZ developer and 6C is for Deemed Exports. GSTR-9 is an annual
return and a taxpayer is required to disclose in Serial No. 5(B), the details of
supply to SEZs without payment of tax. The appellant has shown gross
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negligence in omitting the purported SEZ supplies not only from GSTR-1 but
also from GSTR-9.
[8] The present case involves disputed questions of fact. The taxpayer argues
that he is in possession of all tax invoices in respect of his supply to SEZ and
other export related documents. “It is further submitted that the Appellant
had duly furnished invoices, SEZ endorsements, Bills of Export, and
supporting documents evidencing supplies to SEZ units. Despite this, the
Respondent arbitrarily accepted one invoice as SEZ supply while treating
others as exports without assigning any cogent reasons, rendering the
impugned order non-speaking and violating the principles of natural justice.”
(Source: Synopsis of Grounds of Appeal)
[9] On the contrary, the First Appellate Authority has recorded in para 5.9 of
his order that “the appellant did not submit any of the mandatory documents
prescribed under Rule 89(2) of the CGST Rules, 2017, including copies of
export invoices, shipping bills, EGM details, SEZ endorsement, LUT/Bond,
and reconciliation statements.”
Moreover, the present case requires reconciliation of the discrepancies in the
turnover of supply to SEZ.
[10] Therefore, we are of the considered view that the ends of justice shall be
met if the impugned appellate order is set aside and the case is remanded to
the jurisdictional Proper Officer for re-examination of the refund claim of the
taxpayer. Accordingly we set aside the impugned order passed by the First
Appellate Authority and remand back the matter to the Proper Officer with
the following directions:-
The taxpayer shall submit, inter alia, the following material documents/
reconciliations, within 4 weeks from the date of communication of this order,
prepare a list thereof and obtain receipt from the office of the proper officer.
(i) Invoice-wise reconciliation of different categories of zero-rated
supply as per GSTR-1, GSTR-3B, RFD-01 and GSTR -9.
(ii) Copies of all tax invoices, shipping bills in respect of export and
supply of goods to SEZ
(iii) Endorsements by the Specified officer as required under the first
proviso to rule 89 of CGST Rules, 2017.
(iv) Letter of Undertaking
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After giving the taxpayer reasonable opportunity of being heard, the Proper
Officer shall pass a speaking order in accordance with Rule 92 of CGST Rules,
2017, within four weeks from the date of conclusion of the hearing. It is made
clear that the Proper Officer shall be at liberty to call for any other material
document or information having a bearing on the claim of refund.
Communicate copies of this order to the appellate and the respondents
immediately.

SATYA GOPAL
CHATTOPADHYAY
Digitally signed by SATYA GOPAL
CHATTOPADHYAY
Date: 2026.11.06 13:05:31 +05'30'


S.G Chattopadhyay
Judicial Member
ANINDYA MITRA

Digitally signed by ANINDYA MITRA
Date: 2026.11.06 13:26:05 +05'30'

Anindya Mitra
Technical Member














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