The Madras High Court ruled in favor of M/s. McKinsey Global Services India Pvt. Ltd., a Special Economic Zone (SEZ) unit, affirming its entitlement to claim a refund of unutilized Input Tax Credit (ITC). The case centered on a refund claim of ₹8,67,13,158, which had been previously denied on the grounds that existing provisions, specifically Section 16 of the IGST Act, Section 54 of the CGST Act, and Rule 89 of the CGST Rules, only explicitly allow suppliers to SEZ units to claim such refunds.
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The petitioner challenged previous orders that denied the refund, citing earlier decisions by the Madras High Court in cases like Platinum Holdings and Urjita Electronics, which supported the eligibility of SEZ units to claim refunds. The Revenue's argument that an appeal was pending against the Platinum Holdings decision did not sway the court, as no interim order had been obtained.
The court reaffirmed that Rule 89 does not restrict refund claims solely to suppliers, emphasizing that statutory provisions should not be interpreted to include unwritten restrictions. The court set aside the impugned orders, directing the respondents to process the refund application within two months, thus reinforcing the SEZ unit's right to claim refunds of unutilized ITC.
Order Date - 18 September 2026
Parties: M/s. McKinsey Global Services India Pvt. Ltd. v. Joint Commissioner (Appeals II) & Another
Facts -
- M/s. McKinsey Global Services India Pvt. Ltd. (now known as M/s. McKinsey Global Capabilities and Services Pvt. Ltd.) is a SEZ unit that sought refund of ₹8,67,13,158 along with applicable interest.
- The refund claim was rejected on the reasoning that Section 16 of the IGST Act, Section 54 of the CGST Act and Rule 89 of the CGST Rules permit refund claims by suppliers making supplies to SEZ units, but do not specifically enable an SEZ unit to claim refund of unutilised ITC.
- The petitioner challenged the order-in-original dated 09.11.2023 and the appellate order dated 13.02.2024, relying on the Madras High Court's decisions in Platinum Holdings and Urjita Electronics.
- The Revenue contended that an appeal had been filed against Platinum Holdings, though it admitted that no interim order had been obtained in that appeal.
Issue -
- Whether a SEZ unit is entitled to claim refund of unutilised Input Tax Credit under Section 54 of the CGST Act read with Rule 89 of the CGST Rules.
Order -
- The Court noted that the same issue had already been considered in Platinum Holdings, where it was held that Rule 89(1) does not restrict refund applications only to suppliers to SEZ units. The reference to a supplier in the Rule cannot automatically exclude other eligible applicants.
- The Court held that the Revenue had wrongly read a restriction into Rule 89 by treating the provision as if it contained the word “only”. Courts cannot insert words or restrictions into a statutory provision that Parliament has not included.
- The subsequent decision in Urjita Electronics had reiterated the same legal position. The Court therefore found no reason to depart from the earlier decisions concerning the entitlement of a SEZ unit to claim refund.
- Accordingly, the impugned orders were set aside, and the respondents were directed to process the petitioner's refund application within two months from receipt of the order.
