Refund— Section 54(3) of CGST Act—The present appeal has been filed against the Advance Ruling passed by the Authority for Advance Ruling under GST, Goa State.

The short issue for determination is whether the appellant is entitled to claim the refund of unutilised input tax credit on export of services as per Section 16(3)(a) of the IGST Act and 54(3) of the CGST Act, as claimed by them or whether they are not entitled to the said refund, as held in the impugned , ruling of the lower authority.

In appeal, the Appellant avers that the Advance Ruling Authority has applied the second proviso to Section 54(3) of the CGST Act, 2017 which does not apply to the appellant since the appellant is exporting a service and not goods. 

The lower authority has examined this aspect and considered that the rate of export duty on iron ore pellets is Nil, however Nil rate of tax is also a rate of tax/duty; and that since the goods exported are covered under Second Schedule to the Export Tariff appended to the Customs Tariff Act, 1975 the said goods are to be considered as subjected to tax i.e. export duty; and hence, the exclusion under proviso to Section 54(3) is applicable, whereby the appellant is not eligible for refund of unutilized input tax credit.

Held that— This authority do not find any flaw in the above reasoning and findings of the lower authority. That is, the statutory provision i.e, proviso to Section 54(3) ibid speaks of goods which are subject to export duty’. The phrase ‘subject to export deity’ is equivalent to leviable to export duty’, in the given context. It is not denied that the goods exported are covered under the Export Tariff as being subject to i.e., leviable to export duty, though by an exemption Notification such export duty payable is NIL. It is well-settled principle that goods being exempted or chargeable to Nil rate of duty by virtue of Notifications etc., does not remove the goods from the category of those ‘leviable to duty’.