The Jharkhand High Court has directed the department to refund ₹1,23,22,617 in GST to Tata Steel, which operates the largest steel plant in Jamshedpur, Jharkhand.
The business claims the Input Tax Credit (ITC) on Compensation Cess paid for the purchase of coal, a vital raw material, under section 8(2) of the Goods and Services Tax (Compensation to States) Act, 2017.
Determining that the refund was refused by the State on extraneous grounds, the division bench of Chief Justice MS Ramachandra Rao and Justice Deepak Roshan ordered the company to be paid specified interest u/s 56 of the Central Goods and Services Tax Act, 2017.
5 reasons are provided by the respondent authorities on which the application of Tata for a refund was rejected.
Regarding the first point about the non-furnishing of the payment receipt within 180 days of export, the Jharkhand High Court noted that proof of payment is only necessary for the export of services, not for goods. This is in accordance with Rule 89(2)(b) and Rule 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 expressed.
Regarding the second reason for rejecting the Refund Application—specifically, the failure to provide proof of export within 90 days of the invoice—the Court noted that the reconciliation statement submitted by the Company includes the details of the Export General Manifest (EGM). This indicates that the export occurred within the 90-day timeframe following the invoice date.
It also leaned on a 2023 Circular issued from 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.”
The court, regarding the 3rd basis of rejection for non-furnishing of the declaration of non-prosecution, mentioned that no such need is specified under the act. Yet it marked that the company has furnished these declarations in answer to the Show Cause Notice (SCN) issued to it via the department.
The Court discovered that even the 4th ground of rejection concerning non-furnishing of undertaking under proviso to Section 11(2) of the Cess Act is also unsustainable because 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 a Letter of Undertaking without payment of tax, there is no question of set off,” the Court cited.
In conclusion, regarding the final point about the failure to provide a statement as outlined in Para 43(C) of the 2019 Circular from the Department, the Court remarked that a simple review indicates that this requirement only applies when there is a reversal of credit, which is not the case here.
“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 ruled and ordered a refund.
| Case Title | TATA Steel Ltd. vs. State of Jharkhand |
| Citation | W.P. (T) No. 2900 of 2024 |
| Date | 03.04.2025 |
| For the Petitioner | Mr. Salona Mittal and Ms. Amrita Singh |
| For Respondent | Mr. Ashok Kumar Yadav, and Mr. Aditya Kumar |
| Jharkhand High Court | Read Order |
