SEZ entitled to GST refund as it falls within the meaning of ‘any person’ under Section 54 r/w Rule 89

The Hon’ble Madras High Court in the case of Platinum Holdings Pvt. Ltd. Vs. Additional Commissioner of GST & Central Excise [W.P.No.13284 of 2020 decided on August 11, 2021] has held that a Special Economic Zone ("SEZ") falls withing the meaning of ‘any person’ under the provisions of Section 54 of the Central Goods and Services Tax Act, 2017 ("CGST Act") Act dealing with applications for refund read with Rule 89(1) of the Central Goods and Services Tax Rules, 2017 ("CGST Rules").

Platinum Holdings Pvt. Ltd. ("the Petitioner"), a SEZ, had filed applications for refund of the taxes erroneously remitted by it on various dates to its suppliers.  A show cause notice was issued where the locus of the Petitioner to claim the refund was questioned on ground that as per Section 54 of the CGST Act read with Rule 89 of CGST Rules, only a supplier of services would be entitled to claim refund and not the SEZ itself.

The Petitioner contended that it had committed an error by remitting the taxes on the supplies made to it as the supplies being made to it were zero rated supplies exempt from tax. It was further contended that the reference in Section 54 of the CGST Act to 'any person' and would include the SEZ as well and accordingly, it shall be entitled to claim the refund of erroneously remitted tax.

The Hon’ble Madras High Court held that the statutory scheme for refund under the CGST Act and State GST Acts, permits any entity to seek a refund of taxes, including an SEZ. It was observed that the provisions of Section 54 of the CGST Act, providing for a refund, apply to any person who claims such refund and who makes an application for the grant of the same. Thus, it was held that in the present case, the Petitioner shall fall within the meaning of ‘any person’ as enumerated under Section 54 of the CGST Act and accordingly, shall be eligible to seek refund of the taxes paid by it.

Relevant Provisions

Section 54(1) of the CGST Act

54. "Refund of tax-

(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed:

Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed."