Samsung India Electronics (P.) Ltd. V/s State of U.P. {HIGH COURT OF ALLAHABAD}:
Date of Order : 12-03-2024
simplified explanation of the ruling by the High Court of Allahabad in the case of Samsung India Electronics (P.) Ltd.:
Case Overview:
- Assessee: Samsung India Electronics (P.) Ltd., engaged in the export of Information Technology (IT) design and software development services to its overseas holding company SEC Korea.
- Issue: The assessee exported IT services under a Letter of Undertaking (LUT) without payment of Integrated Goods and Services Tax (IGST), which qualifies as zero-rated supply under Section 16 of the IGST Act, 2017. They claimed refunds of unutilized Input Tax Credit (ITC) on CGST, SGST, and IGST paid on inputs and input services used for these exports for the period July 2019 to December 2019.
- Refund Rejection: The refund claim for the mentioned period was rejected by the revenue department, despite similar claims being approved for earlier periods under identical factual and legal circumstances.
Court’s Ruling:
- Principle of Consistency: The High Court emphasized the principle of consistency, which mandates that when faced with identical factual and legal circumstances, the treatment should remain uniform. The court noted that prior to the period in question, the revenue department had consistently sanctioned refund claims to the assessee under the same set of facts.
- Inconsistency and Irrationality: The court found the sudden change in the revenue’s treatment of refund claims for the period July 2019 to December 2019 to be inconsistent and irrational. There was no material change in circumstances to justify withholding the refunds for this specific period.
- Fairness and Equity: According to the court, arbitrary rejection of refund claims despite past precedents and without any valid reason was contrary to principles of fairness and equity in tax administration.
- Decision: The High Court concluded that the order rejecting the refund claim for the period in question was palpably erroneous. It set aside the order and directed the revenue department to sanction the refund of unutilized ITC of CGST, SGST, and IGST paid by the assessee on inputs and input services used for the zero-rated exports to SEC Korea.
Conclusion:
This ruling underscores the importance of consistent application of tax laws and principles by tax authorities. It highlights that tax administrations should maintain uniformity in their decisions when faced with similar factual and legal scenarios unless there are valid reasons to justify any deviation. The decision ensures fairness and equity in tax refunds, providing relief to taxpayers engaged in zero-rated supplies under GST law.
