ITC Received From Input Service Distributor Lying Unutilized In Electronic Credit Ledger Liable To Be Refunded: Gujarat High Court

The Gujarat High Court has held that Input Tax Credit received from input service distributor lying unutilized in electronic credit ledger is liable to be refunded.

The division bench of Justice J.B.Pardiwala and Justice Nisha M.Thakore directed the respondent/department to process the claim of refund made by the writ petitioner/assessee for the unutilized IGST Credit lying in the Electronic Credit Ledger under Section 54 of the CGST Act 2017.

The writ petitioner/assessee has been a pharmaceutical company which operates as a Special Economic Zone (SEZ) and is engaged in the export of goods under the Letter of Undertaking (LUT) from the SEZ Unit. In the year 2017-18, the writ petitioner accumulated Input Tax Credit (ITC) to the tune of Rs.21,66,887/-.

The writ petitioner received the aforesaid Input Tax Credit of the integrated tax from its ISD and ITC inward supply charged by the supplier as is permissible under the law. It is the case of the writ petitioner that being a SEZ Unit making Zero Rated Supplies under the GST, the writ petitioner has not utilised the credit and it is lying unutilized in the Electronic Credit Ledger.

The court has held that the writ petitioner is entitled to claim the refund of the IGST lying in the Electronic Credit Ledger as there is no specific supplier who can claim the refund under the provisions of the CGST Act and the CGST Rules as Input Tax Credit is distributed by the input service distributor.