The Tribunal held that availment, utilisation and refund of ITC are separate statutory concepts, and that the clarifications permitting cess refund apply to zero-rated supplies under bond or LUT, not domestic sales.
The Goods and Services Tax Appellate Tribunal, Lucknow Bench, has allowed six departmental appeals and restored orders rejecting refunds of accumulated Compensation Cess ITC claimed by a leather manufacturer that used coal as boiler fuel [Hemlata Jaiswal v. Pacific Leather P. Ltd. — Batch of 6 Appeals].
The Bench of Santosh Kumar Srivastava (Judicial Member) and Arvind Kumar (Technical Member) held that the First Appellate Authority wrongly treated the absence of a Section 17(5) block as sufficient for refund. Section 17(5) may support availment, but entitlement to cash refund must be independently established under Section 54(3).
The Tribunal accepted that the utilisation restriction in the proviso to Section 11(2) of the Compensation Cess Act is not by itself an absolute bar on refund, but held that the absence of an express prohibition does not create a right to refund in circumstances the statute does not authorise. Mere difference between cess on the input and no cess on the output does not satisfy Section 54(3)(ii), and the exclusion for nil-rated or exempt supplies must be examined for the levy in question.
Circulars No. 45/19/2018-GST and 125/44/2019-GST were held to address zero-rated supplies of aluminium products under bond or LUT and could not support claims on domestic supplies. Rule 89(5) was held to be computational, operating only once the claim falls within a category permitted by Section 54(3).
2026-juristway.com-2995-GSTAT(Lucknow)-GST & 2026-juristway.com-3001-GSTAT(Lucknow)-GST | GSTAT, Lucknow | 13.10.2026
