Kolkata GST Tribunal Sends Leather Firm’s ₹9.06 Lakh Refund Claim Back For Reconciliation After SEZ Supplies Went Unreported

The appellant sought a refund of ₹9,06,045 in unutilised input tax credit for April 2021 to March 2022, claiming that the amount related to zero-rated supplies to an SEZ unit or developer without payment of tax.

The Proper Officer rejected the claim because the SEZ supplies had not been disclosed in the relevant GSTR-1 returns; the First Appellate Authority upheld that rejection, also citing inconsistencies in the returns and the absence of supporting documents.

Before the Tribunal, the appellant asserted that it had invoices, SEZ endorsements and other supporting documents, while the Department disputed the classification and substantiation of the turnover.

Section 16 of the IGST Act, 2017 treats exports and supplies for authorised operations to an SEZ unit or developer as zero-rated supplies and permits eligible refund of unutilised ITC, subject to the statutory conditions.

Rule 89(4) of the CGST Rules, 2017 provides the formula for calculating refund of accumulated ITC on zero-rated supplies; Rule 89(2) and the first proviso to Rule 89 require prescribed supporting documents and, for SEZ supplies, the relevant endorsement by the specified officer.

The Tribunal also noted the GSTR-1 and GSTR-9 reporting requirements for exports and SEZ supplies and directed the Proper Officer to pass a speaking order under Rule 92.

The Tribunal found material factual disputes concerning the nature and amount of the alleged SEZ supplies, including inconsistencies between the refund application and statutory returns.

The appellant claimed to possess the necessary invoices and endorsements, whereas the First Appellate Authority had recorded that required documents were not submitted.

Because the claim required invoice-wise verification and reconciliation across GSTR-1, GSTR-3B, RFD-01 and GSTR-9, the Tribunal considered remand more appropriate than either finally allowing the refund or conclusively rejecting it.

The appellant was directed to provide, within four weeks of communication of the order, invoice-wise reconciliations, relevant invoices and shipping bills, SEZ endorsements, and the Letter of Undertaking.

After providing a reasonable opportunity of hearing, the Proper Officer was directed to issue a speaking order under Rule 92 within four weeks after the hearing concludes.