Department cannot deny Refund of ITC on supplies made to SEZ Units in absence of endorsement certificate not attached along with application but produced later.

Case Title: Fedex Express Transportation and Supply Chain Services (India) v. Additional Commissioner

Court Name: High Court of Andhra Pradesh

Petition Number: Writ Petition Nos. 2478 & 2498 of 2022

Category of Dispute: Refund – Supply to SEZ Units

Date of Judgement: 5th August 2022

Relevant Sections:

Section 54 & Section 107 of the CGST Act, 2017

Rule 89 & Rule 112 of the CGST Rules, 2017

Corresponding provisions under Andhra Pradesh GST Act and Rules

Facts of the Case [Paras 3–4]

1. The petitioner, Fedex Express, is registered under the CGST and APGST Acts and is engaged in providing courier services to SEZ units, qualifying as zero-rated supplies under Section 16 of the IGST Act.
2. Refund applications for periods April–July 2018 and August 2018–March 2019 were filed under Section 54 read with Rule 89. Due to the COVID-19 pandemic, the required endorsement certificates from SEZ specified officers could not be submitted. [Para 3(iii)-(v)]
3. The Department issued SCN in Form GST RFD-08 for non-submission of endorsement certificates. The petitioner replied and later submitted the endorsement from Ramky Pharmacity dated 11.01.2021 during the pendency of appeal. [Para 3(vi)-(vii)]
4. The Appellate Authority rejected the appeal solely on the ground that the endorsement certificate was submitted late and not with the original refund application. [Para 3(vii), 4]

Questions in Consideration [Para 5]

1. Whether the Appellate Authority can accept the endorsement certificate submitted belatedly during appeal proceedings?
2. Whether rejection of refund without affording an opportunity to explain the delay in filing the endorsement certificate is violative of natural justice?

Observations of the Court

1. The petitioner was continuously in correspondence with SEZ units from June 2020 to January 2021, establishing due diligence in trying to obtain the certificates. [Para 9]
2. The COVID-19 pandemic and associated restrictions constituted “sufficient cause” for non-filing of endorsement certificates with the original refund claim. [Para 10]
3. Rule 112 and Section 107 empower the Appellate Authority to admit additional evidence if prevented by sufficient cause. The case squarely fits such conditions. [Paras 11–13]
4. Appellate Authority’s own order acknowledged that additional evidence may be admitted in appropriate cases, which was applicable here. [Para 13]
5. No opportunity was given to the petitioner to explain why certificates did not cover all refund periods, violating principles of natural justice. [Para 14–15]

Judgement of the Court

1. The High Court held that the petitioner’s explanation for the delayed submission of endorsement certificates due to the pandemic was valid.
2. The impugned appellate order dated 30.07.2021 was set aside.
3. The matter was remanded to the Appellate Authority with directions to accept the additional evidence and adjudicate the matter afresh, in accordance with law. [Paras 16–17]

Between Fine Lines (Plain Language Summary)

• Fedex filed refund claims for services to SEZs without endorsement certificates due to COVID-19 disruptions.
• The court accepted that the delay was justified due to pandemic-induced restrictions.
• The Appellate Authority was found to have the discretion and legal backing to admit such late evidence.
• The court emphasized natural justice and remanded the case for fresh adjudication.
• This decision supports taxpayers impacted by procedural delays caused by uncontrollable events.

Summary of Referred Cases

Takeaway: COVID-19 Delay Recognized: Endorsement Certificate Not Mandatory with Initial SEZ Refund Claim

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