Design & Engineering Services To Foreign Entities Are Zero-Rated Supplies; Assessee Eligible For Refund Of Unutilized ITC U/S 54 Of CGST Act: Bombay HC

The Bombay High Court has ruled that design and engineering services provided to foreign entities qualify as "zero-rated supplies" under the GST law. Consequently, the court held that the assessee providing these services is eligible for a refund of unutilized Input Tax Credit (ITC). The case involved a service provider who was exporting design services. The GST department had contested their refund claim. However, the High Court clarified that the export of services is considered a zero-rated supply, which means that while no GST is charged on the output service, the provider can claim a refund of the GST they have paid on their inputs. This judgment is a significant relief for service exporters, as it upholds the fundamental principle of GST, which is to not export domestic taxes and to ensure that Indian services are competitive in the global market.