Jharkhand High Court Orders ₹1.23 Crore GST Refund To Tata Steel Over ITC On Compensation Cess

The amount represented Input Tax Credit (ITC) on Compensation Cess paid by the company under Section 8(2) of the Goods and Service Tax (Compensation to States) Act, 2017 for purchasing its key raw material- Coal.

Finding that the refund was denied by the State on 'extraneous grounds', the division bench of Chief Justice MS Ramachandra Rao and Justice Deepak Roshan also ordered the company be paid stipulated interest under Section 56 of the Central Goods and Services Tax Act, 2017.

Respondent-authorities had given five grounds on which Tata's application for refund was rejected.

So far as the 1st ground with regards to non-furnishing of receipt of payment within 180 days of export is concerned, Court observed that proof of payment is only required for export of services and not of goods (Refer Rule 89(2)(b) and 89(2) (c) of the CGST Rules).

“As a matter of fact, for export of goods, only a reconciliation statement of the Shipping Bill and Export Invoices is required, which has already been annexed to the refund application,” it said.

Coming to second ground of rejection of the Refund Application i.e. non-furnishing of proof of export within 90 days of invoice, Court said , it transpires from the reconciliation statement filed by the Company that EGM (Export General Manifest) details are given and it is evident that export is within 90 days of invoice.

It also relied on a 2023 Circular issued by the Department, "as long as goods are actually exported... even if it is beyond the time frames as prescribed in sub-rule (1) of rule 96A... the said exporters would be entitled to refund of unutilized input tax credit."

So far as the 3rd ground of rejection regarding non-furnishing of declaration of non-prosecution is concerned, the Court said no such requirement is prescribed under the Act. Yet, it noted, the company had given such a declaration in response to the Show Cause Notice issued to it by the Department.

The Court found that even the 4th ground of rejection regarding non furnishing of undertaking under proviso to Section 11(2) of the Cess Act is also not sustainable, in view of the fact that proviso to Section 11(2) of the Cess Act only provides that ITC of Cess can be set off against Output Tax Liability of Cess.

“Since the Petitioner exports goods under Letter of Undertaking without payment of tax, there is no question of set off,” Court said.

Finally, coming to the last ground of non-furnishing of statement as per Para 43(C) of a 2019 Circular of the Department, the Court said a bare perusal shows that it only applies when there has been a reversal of credit, which is absent in the present case.

“It is clear that the impugned order has no legs to stand in the eye of law as the same is based on extraneous grounds which are beyond the requirements of the CGST Act & Rules and the binding Circulars issued thereunder,” the Court thus ruled and ordered refund.

Appearance: For the Petitioner : Mr. Salona Mittal, Advocate Ms. Amrita Singh, Advocate For the Resp.-State : Mr. Ashok Kumar Yadav, Sr. S.C.-I Mr. Aditya Kumar, A.C. to Sr. S.C.-I

Case title: Tata Steel Ltd v. State of Jharkhand

LL Citation: 2025 LiveLaw (Jha) 26

Case no.: W.P. (T) No. 2900 of 2024

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