Case Details: Atul Ltd. vs. Assistant Commissioner, CGST and Central Excise Division VIII [2025] 180 taxmann.com 591 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Pranav Trivedi, JJ.
• Abhay Y. Desai for the Petitioner.
• Ms Hetvi H. Sancheti for the Respondent.

Facts of the Case

The petitioner, a manufacturer-exporter made zero-rated supplies, including exports and SEZ sales, and procured coal for captive power generation, on which Compensation Cess was paid and ITC was availed. It was submitted a claim for refund of accumulated unutilised Cess credit attributable to zero-rated supplies made with payment of IGST, contending that exported goods were not leviable to Cess. The jurisdictional officer under CGST issued a show-cause notice proposing rejection of the refund, subsequent adjudication and first appeal also rejected the claim. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that the jurisdictional officer under CGST and the Department of Revenue misinterpreted the circulars. It was observed that since exports were subject to IGST and the final goods were not liable to Compensation Cess, the Cess ITC on coal remained unutilised. The Court concluded that, considering Section 54(3) of the CGST Act, Section 16(3) of the IGST Act, and Section 11(2) of the GST (Compensation to States) Act together, the petitioner could claim a refund of the unused Cess credit on coal used to manufacture exported goods. It also ruled that the proviso to Section 11(2) did not apply and therefore set aside the earlier orders, allowing the refund.

List of Cases Reviewed

• Atul Ltd. v. Union of India [2025] 176 taxmann.com 946/101 GSTL 376 (Gujarat) (para 20) followed

List of Cases Referred to

• Patson Papers (P.) Ltd. v. Union of India [2025] 174 taxmann.com 6 (Gujarat) (para 18)
• Atul Ltd. v. Union of India [2025] 176 taxmann.com 946/101 GSTL 376 (Gujarat) (para 18).

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