NOTIFICATIONS AND CIRCULARS
Sec. 54-58
Chapter XI
Rule 89-97A
Forms RFD-01 to RFD-11
Circular 125/2019, 135/2020, 137/2020 and other circulars
• Circular No. 17/17/2017- GST dated 15.11.2017
• Circular No. 24/24/2017- GST dated 21.12.2017
• Circular No. 37/11/2018- GST dated 15.03.2018
• Circular No. 45/19/2018- GST dated 30.05.2018
• Circular No. 59/33/2018- GST dated 04.09.2018
• Circular No. 70/44/2018- GST dated 26.10.2018
• Circular No. 79/53/2018- GST dated 31.12.2018
• Circular No. 94/13/2019- GST dated 28.03.2019
Explanation 1 to section 54 "refund"
1. Refund of excess balance in the electronic cash ledger;( Sec. 49(6))
includes refund of tax paid on zero-rated on inputs or input services refund of tax on the refund of unutilised
2. Refund of excess payment of tax;
3. Refund of tax paid on intra-State supply which is subsequently held to be interState supply and vice versa;( Sec. 77)
4. Refund on account of assessment/provisional assessment/appeal/any other order;`
As per Sec 54(8) & Circular 125/44/2019
Exports
Supplies to SEZ Unit/ SEZ Developer
Without payment of tax
with payment of tax;
Without payment of tax
with payment of tax;
Refund of unutilized ITC on account of accumulation due to inverted tax structure;
Refund of excess payment of tax;
Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;
CG, IS partly
Wrong Payment of Taxes, Sec 77
Deemed Exports
Refund on account of assessment/ provisional assessment/ appeal/any other order;
Refund of excess balance in the electro nic cash ledger; (Sec. 49(6)) 1
Refund of unutilized input tax credit (ITC)of Input or input services on account of exports.
Same as Exports
a)Goods
b) Services
Rule 96The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India. No Separate Application Required.
Refund to supplier of tax paid on deemed export supplies;
Refund to recipient of tax paid on deemed export supplies;
54(1) Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may
Form GST RFD-01
Any Person means either buyer or seller can make application of refund.
Any other Amount:- Eg. Pre deposit of appeal, penalty, Fee.
Provided that a registered person the electronic cash ledger in accordance provisions subsection (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed.
Rule 89
(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.
Relevant Date:- As per explanation 2 to sec. 54
Sec. 49(6):- The balance in the electronic cash ledger or electronic credit ledger after payment of tax, interest, penalty, fee or any other amount payable under this Act or the rules made thereunder may be refunded in accordance with the provisions of section 54
Relevant Date in this case is not as per
Explanation 2 to section 54
Time period extended by 18 months in N.N. 20/2018
(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period.
54(10) relates to deduction from refund for unpaid amount or withhold refund until the return furnished
Provided that no refund of unutilised input tax credit allowed in cases other than—
I. zero-rated supplies made without II. where the credit has accumulated inputs being higher than (other than nil rated or fully goods or services or both as may be notified by the Government on the recommendations of the Council:
i.e. Export/ Supply to SEZ under Bond/ LUT
N.N. 5/2017 for goods
N.N. 15/2017 for services(Services as specified in 5(b) of schedule II)( construction)
Sec. 2(106) "tax period" means the period for which the return is required to be furnished;
Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:
Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies
2(62) & 2(63) Para
This point is relevant, as in case of exports the period of two years is to be checked from relevant date INDIVIDUALLY and when the two or more relevant dates fall under same tax period then the relevant date from latter should be considered, as there can be SINGLE application for a Tax period. As per Law applicant can file refund application at the end of Tax Period only, and the situation is beyond his control. But in this artificial bunching should be avoided to extend the period of Limitation and minimum tax period for which refund can be applied should be considered.
“Input tax" in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—
a) the integrated goods and services tax charged on import of goods;
b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services TaxAct, but does not include the tax paid under the composition levy;
SEC. 2(63) (Input Tax Credit)
“Input tax credit” means the credit of input tax
(4) The application shall be accompanied by—
a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and
b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person:
Provided that where the amount claimed as refund is less than lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person.
(5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57.
(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zerorated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations safeguards as may be prescribed52 and thereafter make under sub- section (5) for final settlement of the refund due verification of documents furnished by the applicant
Sec. 16 of IGST Act,” Zero rated supply" means any of the following supplies of goods or services or both, namely:—
a) export of goods or services or both; or
b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit
2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply
(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:
a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
(7) The proper officer shall issue the order under sub within sixty days from the date of receipt of application all
b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.
Rule 91
Interest from 61st day. The amount must be credited in bank account in 60 days
(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to—
a) refund of tax paid on 53[export] of goods or services or both or on inputs or input services used in making such 53[exports];
b) refund of unutilised input tax credit under sub-section (3);
c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;
d) refund of tax in pursuance of section 77;
e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or
f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify
(8A) The Government may disburse the refund of the State tax in such manner as may be prescribed.
(9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of subsection (8).
(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may—
a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be;
b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law.
Explanation.—For the purposes of this sub-section, the expression "specified date" shall mean the last date for filing an appeal under this Act.
(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.
(12) Where a refund is withheld under sub-section (11), the taxable shall, notwithstanding anything contained in section 56, be interest at such rate not exceeding six per cent as may be notified recommendations of the Council, if as a result of the appeal proceedings he becomes entitled to refund.
(13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a nonresident taxable person under sub-section (2) of section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39.
Not. 13/2017 @ 6% Provision relating to CTP/NRTP. Can claim
(14) Notwithstanding anything contained in this section, no refund under sub-section (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees
(a) in the case of goods exported out of India where a refund of tax paid available of goods themselves or, as the case may be, the inputs or input services used in such goods,
I. if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or
II. if the goods are exported by land, the date on which such goods pass the frontier; or
III. if the goods are exported by post the date of despatch of goods by the Post Office concerned to a place outside India;
(b) in the case of supply of goods regarded as deemed exports where a refund tax paid is available in respect of the goods,
the date on which the return relating to such deemed exports is furnished;
(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of
I) where the supply of services had been completed prior to the receipt of payment; (Payment After Completion)
receipt of payment in convertible foreign exchange [or in Indian rupees wherever permitted by the Reserve Bank of India],
II) where payment for the services had been received in advance prior to the date of issue of the invoice; (Payment Before Completion) issue of invoice,
(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court,
the date of communication of such judgment, decree, order or direction;
(e)in the case of refund of unutilised input tax credit under clause (ii) the first proviso to sub-section (3),
the due date for furnishing of return under section 39 for the period in which such claim for refund arises;
(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and
(h) in any other case, the date of payment of tax.
Note 4: A Refund application filed after correction of deficiency is treated as a fresh refund application, such a rectified refund application, submitted after correction of deficiencies, shall also have to be submitted within 2 years of the relevant date. Para 12 Circular 125/44/2019.
The said restriction on the clubbing of tax periods across financial years for claiming refund thus has been continued vide Paragraph 8 of the Circular No. 125/44/2019-GST dated 18.11.2019, which is reproduced as under:
• “8. The applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years. Registered persons having aggregate turnover of up to Rs. 1.5 crore in the preceding financial year or the current financial year opting to file FORM GSTR-1 on quarterly basis, can only apply for refund on a quarterly basis or clubbing successive quarter…………….. ”
• Hon’ble Delhi High Court in Order dated 21.01.2020, in the case of M/s Pitambra Books Pvt Ltd., vide para 13 of the said order has stayed the rigour of paragraph 8 of Circular No. 125/44/2019-GST dated 18.11.2019 and has also directed the Government to either open the online portal so as to enable the petitioner to file the tax refund electronically, or to accept the same manually within 4 weeks from the Order. Hon’ble Delhi High Court vide para 12 of the aforesaid Order has observed that the Circulars can supplant but not supplement the law. Circulars might mitigate rigours of law by granting administrative relief beyond relevant provisions of the statute, however, Central Government is not empowered to withdraw benefits or impose stricter conditions than postulated by the law. No Restriction u/s 16(3) of IGST and 54(3) of CGST,2017
• Further, same issue has been raised in various other representations also, especially those received from the merchant exporters wherein merchant exporters have received the supplies of goods in the last quarter of a Financial Year and have made exports in the next Financial Year i.e. from April onwards. The restriction imposed vide para 8 of the master refund circular prohibits the refund of ITC accrued in such cases as well.
Note:- Bunching of GST refund claim is now allowed on the portal also.
The Government may, on the recommendations of the Council, by notifi- cation, specify any specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries and any other person or class of persons as may be specified in this behalf, who shall, subject to such conditions refund of taxes paid on the notified59 supplies of goods or services
Not. 6/2017 –CSD-50% of CGST
Not. 11/2019- International Airport
Retail Outlets Tax Free Shops
[(1) Any person eligible to claim refund of tax paid by him on his inward supplies as per notification issued under section 55 shall apply for refund in FORM GST RFD-10 once in every quarter, electronically on the common portal or otherwise, either directly or through a Facilitation Centre notified by the Commissioner, along with a statement of the inward supplies of goods or services or both in FORM GSTR-11.]
(2) An acknowledgement for the receipt of the application for refund shall be issued in FORM GST RFD-02.
(3) The refund of tax paid by the applicant shall be available if
a) the inward supplies of goods or services or both were received from a registered person against a tax invoice; ]
b) name and Goods and Services Tax Identification Number or Unique Identity Number of the applicant is mentioned in the tax invoice; and
c) such other restrictions or conditions as may be specified in the notification are satisfied.
(4) The provisions of rule 92 shall, mutatis mutandis, apply for the sanction and payment of refund under this rule
(5) Where an express provision in a treaty or other international agreement, to which the President or the Government of India is a party, is inconsistent with the provisions of this Chapter, such treaty or international agreement shall prevail.
If any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest at such rate not exceeding six per cent as may be specified in the notification63 issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax:
Provided that where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent as may be notified63 by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund.
Explanation. —For the purposes of this section, where any order of refund is made by an Appellate Authority, Appellate Tribunal or any court against an order of the proper officer under sub-section (5) of section 54, the order passed by the Appellate Authority, Appellate Tribunal or by the court shall be deemed to be an order passed under the said sub-section (5).
•Petitioner Stated that in accordance with section 54(6) read with rule 91 of CGST Rules 2017 , Proper officer was required to refund at least 90% of the refund claimed on account of zero rated supply of goods or services or both made by registered persons within 7 days from the date of acknowledgment issued under Rule 90.
• He stated that despite the period of 15 days from the date of filing of the refund application having expired, the respondent had till that date neither pointed out any deficiency/discrepancy in FORM GST RFD-03 nor it had issued any acknowledgement in FORM GST RFD-02
Held
•HC found that Rules 90 and 91 of the CGST Rules provide a complete code with regard to acknowledgement, scrutiny and grant of refund. The said Rules also provide a strict time line for carrying out the aforesaid activities.
•Rules 90 states that within 15 days from the date of filing of the refund application, the respondent has to either point out discrepancy/deficiency in FORM GST RFD-03 or acknowledge the refund application in FORM GST RFD-02.
•In the event deficiencies are noted and communicated to the applicant, then the applicant would have to file a fresh refund application after rectifying the deficiencies.
•In the event default or inaction to carry out the said activities within the stipulated period, consequences like payment of interest are stipulated in Section 56 of CGST Act.
•Admittedly, till the date of the Court hearing, the petitioner’s refund application had not been processed.
• Also neither any acknowledgment in FORM GST RFD-02 had been issued nor any deficiency memo had been issued in RFD-03 within 15 days
•Therefore, the refund application would be presumed to be complete in all respects in accordance with Rule 89 of CGST Rules.
•To allow the respondent to issue a deficiency memo today would amount to enabling the Respondent to process the refund application beyond the statutory timelines as provided under Rule 90.
•This could also be construed as rejection of the petitioner’s initial application for refund as the petitioner would thereafter have to file a fresh refund application after rectifying the alleged deficiencies.
•This would not only delay the petitioner’s right to seek refund, but also impair petitioner’s right to claim interest from the relevant date of filing of the original application for refund as provided under the Rules.
•Also, the respondent’s prayer to raise a deficiency memo is a hyper-technical plea as admittedly, all the relevant documents have been annexed with the present writ petition and the respondent is satisfied about their authenticity. Consequently, High Court was of the view that the respondent had lost the right to point out any deficiency, in the petitioner’s refund application , at this belated stage . Accordingly , the court directed the respondent to pay the petitioner the refund along with interest in accordance with law within two weeks
The Government shall constitute a Fund, to be called the Consumer Welfare Fund and there shall be credited to the Fund,—
a) the amount referred to in sub-section (5) of section 54;
b) any income from investment of the amount credited to the Fund; and
c) such other monies received by it, in such manner as may be prescribed
Rule 97
(1) All sums credited to the Fund shall be utilised by the Government for the welfare of the consumers in such manner as may be prescribed.
Rule 97
(2) The Government or the authority specified by it shall maintain proper and separate account and other relevant records in relation to the Fund and prepare an annual statement of accounts in such form as may be prescribed in consultation with the Comptroller and Auditor General of India.
Change in manner of refund of tax paid on supplies other than zero rated supplies
Circular No. 125/44/2019-GST dated 18.11.2019, in para 3, categorizes the refund applications to be filed in FORM GST RFD-01 as under:
a) Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
b) Refund of tax paid on export of services with payment of tax; .
c) Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
d) Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;
e) Refund of unutilized ITC on account of accumulation due to inverted tax structure;
f) Refund to supplier of tax paid on deemed export supplies;
g) Refund to recipient of tax paid on deemed export supplies;
h) Refund of excess balance in the electronic cash ledger;
i) Refund of excess payment of tax;
j) Refund of tax paid on intra-State supply which is subsequently held to be inter State supply and vice versa;
k) Refund on account of assessment/provisional assessment/appeal/any other order;
l) Refund on account of “any other” ground or reason.
For the refund of tax paid falling in categories specified at S. No. (i) to (l) above i.e. refund claims on supplies other than zero rated supplies, no separate debit of ITC from electronic credit ledger is required to be made by the applicant at the time of filing refund claim, being claim of tax already paid. However, the total tax would have been normally paid by the applicant by debiting tax amount from both electronic credit ledger and electronic cash ledger. At present, in these cases, the amount of admissible refund, is paid in cash even when such payment of tax or any part thereof, has been made through ITC.
RFD-06=Rs.4000( 5000-1000)cash
(Encashment
Rs. 2000)
(
3500
If the bank account details mentioned by an applicant in the refund application submitted in FORM GST RFD-01 are invalidated, an error message shall be transmitted by PFMS* to the common portal electronically and the common portal shall make the error message available to the applicant and the refund officers on their dashboards. On receiving such an error message, an applicant can:
(a) rectify the invalidated bank account details by filing a non-core amendment in FORM GST REG-14; or
(b) add a new bank account by filing a non-core amendment in FORM GST REG-14
*PUBLIC FUND MANAGEMENT SYSTEM
54(3) (Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than''
ii) Where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:
ITC rate on inputs
CG, IS partly
IS GREATER THAN
Rate of tax on output supplies
Output can have both goods or services
It has been brought to the notice of the Board that some of the applicants are seeking refund of unutilized ITC on account of inverted duty structure where the inversion is due to change in the GST rate on the same goods. This can be explained through an illustration. An applicant trading in goods has purchased, say goods “X” attracting 18% GST. However, subsequently, the rate of GST on “X” has been reduced to, say 12%. It is being claimed that accumulation of ITC in such a case is also covered as accumulation on account of inverted duty structure and such applicants have sought refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act.
It may be noted that refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of sub-section (3) of section 54 of the CGST Act. It is hereby clarified that refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act would not be applicable in cases where the input and the output supplies are the same.
No. 14/2022-CT
173/02/2022 &
Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification
Vide circular, para 3.2 of Circular No. 135/05/2020-GST dated 31.03.2020 stands SUBSTITUTED as under:
3.2 It may be noted that refund of accumulated ITC in terms of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies.
“
It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act.”
Notification No. 14/2022-CT
Circular No. 173/02/2022 & Vide circular, para 3.3 of Circular No. 135/05/2020-GST
dated 31.03.2020 stands SUBSTITUTED as under:
3.3 There may, however, be cases where although inputs and output goods are the same, the output supplies are made under a concessional notification due to which the rate of tax on output supplies is less than the rate of tax on inputs.
In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the same point of time due to the supply of goods by the supplier under such concessional notification, the credit accumulated on account of the same is admissible for refund under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act, other than the cases where output supply is either Nil rated or fully exempted, and also provided that supply of such goods or services are not notified by the Government for their exclusion from the refund of accumulated ITC under the said clause.”
The refund is admissible in cases where inputs and output goods are same but the output supplies are made under a concessional notification due to which the rate of tax on output supplies is less than the rate of tax on inputs.
a) Where the inputs are taxable at 18% and outward supply also taxable at 18%, however under a concessional notification provides for reduced rate in special circumstances. Example could be the supply made to Public funded research institution under NN 47/2017-ITR at concession rate of 5% – IDS refund is admissible.
b) An applicant trading in goods has purchased, say goods “X” attracting 18% GST. However, subsequently, the rate of GST on “X” has been reduced to, say 12%. -IDS refund is not admissible as per para 3.2 of circular No. 135/05/2020-GST dated 31.03.2020.
[2021] 130 taxmann.com 182 (Gauhati)
HIGH COURT OF GAUHATI
BMG Informatics (P.) Ltd. v. Union of India
GST : Provisions of paragraph 3.2 of Circular No. 135/05/2020-GST dated 31-3-2020 providing that even though different tax rate may be attracted at different point of time, but refund of accumulated unutilized tax credit will not be available under section 54(3)(ii) in cases where input and output supplies are same, would have to be ignored
[2022] 140 taxmann.com 326 (Rajasthan)
HIGH COURT OF RAJASTHAN Baker Hughes Asia Pacific Ltd. v. Union of India
GST : Circular No.135/05/2020-GST, dated 31-3-2020 which stipulates that refund under inverted duty structure in terms of section 54(3)(ii) would not be available where input and output supplies are same is repugnant and conflicting to parent legislation i.e. section 54(3)(ii)
AMRITA SINHA, J. WPA NO. 54 OF 2022
MARCH 11, 2022
Refund - Unutilized ITC - Petitioners were engaged in business of purchasing Liquefied Petroleum Gas (LPG) in bulk quantity and thereafter same was refilled in small bottles/cylinders and then sold to commercial and domestic consumers
- Rate of tax on input supply (LPG in bulk) is 18 per cent and rate of on output supply (LPG in small containers for domestic consumers) is 5 per cent - Adjudicating authority by an order rejected petitioner's claim of refund by relying on Circular No. 135/05/2020-GST, dated 31-3-2020 wherein it has been mentioned that taxpayers cannot claim refund in terms of clause (ii) of section 54(3) in cases where input and output supplies remain same - HELD : Refund of unutilized input tax credit was to be allowed under section 54 where credit accumulated on account of rate on inputs was higher than rate of tax on output supplies - Act does not restrict refund only in respect of supplies which are different at input and output stage - However, by way of above circular, Board was curtailing said benefit and making refund only if input and output supplies are different, which amounted to overreaching provisions as laid down in Act - Thus, refund of accumulated input tax credit was admissible [Section 54 of the Central Goods and Services Tax Act, 2017/ West Bengal Goods and Services Tax Act, 2017] [Paras 26 to 29] [In favour of assessee]
Amendment in formula prescribed in Rule 89(5) of CGST Rules, 2017 for calculation of refund of unutilized Input Tax Credit on account of inverted rated structure
Maximum Refund Amount
{(Turnover of inverted rated supply of goods and services) × Net ITC ÷ Adjusted Total Turnover} – tax payable on such inverted rated supply of goods and services
Maximum Refund Amount {(Turnover of inverted rated supply of goods and services) × Net ITC ÷ Adjusted Total Turnover} –[{tax payable on such inverted rated supply of goods and services × (Net ITC ÷ ITC availed on inputs and input services)}]
Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rule (4A) or (4B) or both;
MAXIMUM Refund amount calculation (Rule 89(5))
Input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rule (4A) or (4B) or both
Net ITC
In next Slide
Adjusted Total Turnover
*[{tax payable on such inverted rated supply of goods and services × (Net ITC ÷ ITC availed on inputs and input services)}]
Illustration
1. ITC on inputs = Rs. 18,000/-
2. Total Turnover = Rs 1,00,000/- (Assuming the entire turnover is in relation toinverted duty structure)
3. Tax on Turnover = Rs 5,000/-
4. Total Output Tax = 5000 will be paid through ITC of Rs. 18000. Therefore the balance available in credit ledger will be Rs 13,000/-
5. Maximum Refund Amount = [(100000 X 18000)/100000]-5000=Rs. 13,000/-
Turnover of inverted duty Structure Tax payable on such inverted rate of supply * CA Aanchal Kapoor 45
• Total Turnover = Rs 1 Crore --Inverted Duty (taxable @ 5%) = Rs 50 lakhs
--Other (taxable @ 18%) = Rs 50 Lakhs
• Total ITC availed = Rs 8 Lakhs --on goods = Rs 6 lakhs
--on services = Rs 2 lakhs
• Total Tax paid = Rs 11.5 Lakhs -- Inverted Duty = Rs 2.5 Lakhs
-- Other = Rs 9 lakhs
= 1.125 lakhs
It reduces the tax paid in proportionate to ITC of goods only. Hence, the refund amount is higher Change in formula owing to SC judgement in case of VKC Footsteps
Turnover of Zero Rated Services in terms of clause (D) + Non Zero Rated
LESS THEN ADD, BECOZ ZERO RATED VALUE TO BE CALCULATED AS MENTIONED IN CLAUSE D of 89(4)
Exempt Supplies Reduced as Got added in 2(112). Logic- ITC does not belong to Exempt Supplies so deduced
Turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both
Refund Amount TO BE ALLOWED (Para 37 of Circular 125)
1. Least of the following amounts:
a) Maximum refund amount as per the formula (CONSOLIDATED FOR ALL HEADS)
a) The balance in the electronic credit ledger at the end of the tax period for which the refundclaim is being filed
c) The balance in the electronic credit ledger at the time of filing the refundapplication.
2. After calculating the least of the three amounts, the amount is divided in Heads as per following sequence
a)Integrated tax, to the extent of balance available;
a)Central tax and State tax/Union Territory tax, to the extent of balance available and in the event of a shortfall in the balance available in a particular electronic credit ledger , the differential amount is to be debited from the other electronic credit ledger
A. Amount calculated as per Formula
B. Credit Balance at end of Refund Period
C. Credit Balance at end of Filling Refund Application
50000
30000
28000
1. Total Output Tax of Rs 360/- will be paid through ITC of Rs 385. Therefore the balance available in credit ledger will be Rs 25/-
2. Maximum Refund Amount = [(3000 X 385)/3000]-360 = Rs 25/-
1.
2.
will be Rs. 13/- (985-972).
3. Refund amount to be allowed Rs. 4.81/-.
• Yes, under different categories. E.g Refund of Cash Balance and Refund on Account of Exports.
• Can Refund of Inverted Duty and Exports be made simultaneously for same period for same invoices?
• No, Inverted Duty and Exports with Payment of Taxes for same invoices cannot be applied simultaneously .(2nd Proviso to Section 53(3). However, if one has domestic and Exports both then for domestic covered by Inverted Duty application can be made under Inverted duty & for Export invoices a separate application will be made for same period.
Example: Inverted Duty + Exports
Refund
Purchase= 100 @ 18% Export Sales= 120 @ 10%
ITC =18
Output Tax =12
Export --Refund on payment of taxes= Rs. 12
Refund ( say product is exempt..eg. Rice unbranded)
Purchase= 100 @ 18% Export Sales= 120 @ 10%
ITC =18
Output Tax =0
Export --Refund under Bond/ LUT, ITC= Rs. 18
One refund application---category----ITC on Exports = Refund Rs. 18
Whether Input used directly or indirectly considered in ITC:-
All input ITC, whether directly or indirectly used.
Hence ITC of Stores and spares, packing material, materials purchased for machinery repairs, printing & stationery Items, as part of net ITC ( Stores and spares the expenditure of which is charged as revenue expenditure cannot be held as capital goods.)
a Certificate in Annexure 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees: Provided that a certificate is not required to be furnished in respect of cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54;
Self-Declaration or CA Certificate for non-passing on of incidence of tax, interest or any other amount is not required in following cases:
1. Refund of tax paid on account of export of goods or services
2. Refund of unutilized ITC for export of goods or inverted duty rate structure.
3. Refund of tax paid on a supply which has not been provided.
4. Refund of CGST and SGST HELD to be IGST or vice versa
5. Refund of Tax or Interest borne by notified applicants.
Not. 5/2017-CT (R)
S. No. Tariff item, heading, sub-heading or Chapter
No Refund u/s 54(3)(ii) of following HSN
1. 5007 Woven fabrics of silk or of silk waste
2. 5111 to 5113 Woven fabrics of wool or of animal hair
3. 5208 to 5212 Woven fabrics of cotton
4. 5309 to 5311 Woven fabrics of other vegetable textile fibres, paper yarn
5. 5407, 5408 Woven fabrics of manmade textile materials
6. 5512 to 5516 Woven fabrics of manmade staple fibres
Description of Goods
Not. 20/2018-CT (R) & Circular
56/30/2018
Refund eligible after 01.08.2018 on Reversing of Credit till 31.07.2018 u/s 54(3)(ii) of following HSN
6A# 5608 Knotted netting of twine, cordage or rope; made up fishing nets and other made up nets, of textile materials
6B* 5801 Corduroy fabrics
6C# 5806 Narrow woven fabrics, other than goods of heading 5807; narrow fabrics consisting of warp without weft assembled by means of an adhesive
7. 60 Knitted or crocheted fabrics [All goods]
8. 8601 Rail locomotives powered from an external source of electricity or by electric accumulators
9. 8602 Other rail locomotives; locomotive tenders; such as Diesel-electric locomotives, Steam locomotives and tenders thereof 10 8603
Self-propelled railway or tramway coaches, vans and trucks, other than those of heading 8604 11 8604 Railway or tramway maintenance or service vehicles, whether or not self-propelled (for example, workshops, cranes, ballast tampers, trackliners, testing coaches and track inspection vehicles)
8605
Railway or tramway passenger coaches, not self-propelled; luggage vans, post office coaches and other special purpose railway or tramway coaches, not self-propelled (excluding those of heading 8604) 13 8606
Railway or tramway goods vans and wagons, not self-propelled
Parts of railway or tramway locomotives or rolling-stock; such as Bogies, bissel-bogies, axles and wheels, and parts thereof 15 8608
8607
Railway or tramway track fixtures and fittings; mechanical (including electro-mechanical) signalling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields; parts of the foregoing
CA Aanchal Kapoor
Now many more issues will arise if we strictly analyses the language of the notification. According to the notification, only input tax credit accumulated of in respect of goods is eligible for refund. According to this notification, what happens to excess credit accumulated on account of services or capital goods or ITC accumulated on account of stock- in- trade. Credit accumulated up to 31st July shall lapse but according to Sec 54(3), a registered person is restricted only to claim refund. It is nowhere mentioned in the law that excess duty will lapse.
GST: In absence of express provision in section 54(3) empowering Central Government to provide for lapsing of unutilised ITC, Notifications and Circulars, prescribing for lapsing of ITC were to be quashed and set aside and assessees would be entitled to unutilised ITC accumulated on account of rate of tax on inputs being higher than rate of tax on output.
Section 54 of the Central Goods and Services Tax Act, 2017/Section 54 of the Gujarat Goods and Services Tax Act 2017 - Refund - Tax
- Whether there being no express provision in section 54(3) empowering Central Government to provide for lapsing of unutilised ITC, assessees would have a vested right to unutilised ITC accumulated on account of rate of tax on inputs being higher than rate of tax on output supplies (inverted rate structure) - Held, yes - Whether by prescribing for lapsing of ITC, Central Government had exceeded power delegated under section 54(3)(ii) - Held, yes - Whether therefore, Notification No.05/2017-C.T. (Rate), dated 28-6-2017, as amended by Notification No.20/2018-C.T. (Rate), dated 26-7-2018 and Circular No. 56/30/2018-GST, dated 24-8-2018 to extent they provide that input tax credit lying unutilized in balance, after payment of tax for and upto month of July, 2018, on inward supplies received upto 31-7-2018, shall lapse, are quashed and set aside and declared as ultra vires and beyond scope of section 54(3)(ii)Held, yes [Paras 6 and 27][In favour of assessee]
Without payment of tax
Refund of unutilized input tax credit (ITC)of Input or input services on account of exports.
With payment of tax;
Refund of tax paid on export
Goods
CG
Without Payment of Tax under Bond/LUT
54(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:
Provided that no refund of unutilised input tax credit shall be allowed in cases other than''
Zero rated supplies made without payment of taxes
Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:
Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.
Maximum
Refund
Amount
Turnover of zero-rated supply of goods means
Turnover of Zero rated supply Net ITC
Credit availed on inputs and inputservices
All turnover except Exempt Turnover
• the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or
• the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier,
• whichever is less
Turnover of zero-rated supply of services means
• Payments received during the tax period
• Add: Services completed in current tax period for which advance was received in previous tax periods
• Less: Advance received
Note: Balance Checks in calculating refund amount are same as in REFUND
Rule 89(4)(c) Substituted:- ( Refund on Zero Rated Supply Without Tax under Bond)
“Turnover of zero-rated supply of goods" means
the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or
the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both;‟ .
High Court of Karnataka (WP No. 13185 of 2020) M/s
Tonbo Imaging India Pvt. Ltd. quashes Rule being ultravires and violative of Article 14 of Constitution
Rule 89(4)
In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) × Net ITC ÷ Adjusted
Total Turnover
Explanation inserted – For REFUND the value of goods exported out of India shall be taken as –
(i) the Free on Board (FOB) value declared in the Shipping Bill or Bill of Export form, as the case may be, as per the Shipping Bill and Bill of Export (Forms) Regulations, 2017; or
(ii) the value declared in tax invoice or bill of supply, Whichever is less
The GST invoice is based on Transaction value and it is CIF including goods and freight. So invoice will include both value of goods and freight. But shipping bill is based upon FOB value. And as per circular 125 para 47 in case of unutilised ITC , refund is processed on basis of lower of two values of Gst Invoice and SB. Moreover, even in case of non payment of tax , shipping bill is the deemed application. So refund restricted to shipping bill value in both cases. Moreover supply of services associated with transit cargo to Nepal is exempt by 9B of 12/2017
Export freight is also exempt.
SPECIMEN OF THE INVOICE (without freight)
Containing FOB + Insurance Charges= CIF
SPECIMEN OF THE SHIPPING BILL
Exported goods worth Rs 100000/- chargeable to GST @ 12%=Rs. 12000
Option 1
Without payment of tax
LUT should be furnished
No output tax will be payable.
Refund of Inputs Tax Credit Rs 3000 and Input services Rs 2000.
No refund of Rs 5000 of ITC on capital goods
Option 2
With payment of tax
IGST of Rs 12000/- shall be payable as exports are with payment of taxes.
Rs. 12000 paid 10000 thru Credit Ledger & 2000 in cash
Refund amount Rs. 12000 and there is no fund blockage.
Easier to get Refund
LUT should be furnished
No output tax will be payable.
Refund of Inputs Rs 4500 (including cess) and Input services Rs 2000. Total
Without payment of tax Option 2
With payment of tax
IGST of Rs 5000/- is payable as exports are with payment of taxes.
Rs. 5000 will be adjusted from C,S,I
Cess cannot be used for payment above IGST and will not be available as refund.
Option 1
Without payment of tax
LUT should be furnished
No output tax will be payable.
Refund of Inputs Rs 30000 and Input services Rs 2000. Total Rs 32000/-
Option 2
With payment of tax
IGST of Rs 5000/- is payable as exports are with payment of taxes.
Rs. 5000 will be adjusted from C,S,I
Refund of Tax Paid Rs. 5000/-
A gave order to B for supply of Goods to C
Whether supply of goods qualify as exports
Ans:- Since the goods do not move outside the territory of India. So it cannot be termed as exports
Whether C will be eligible for ITC?
Ans:- No Import for C. C will get invoice from Mr. A. C will not be eligible for credit as tax paying document is in favour of Mr. A in USA.
to in India
Mr. A in Canada
Mr. B in Kerala
Mr. C in Punjab
Invoice By B to A
A gave order to B for supply of Goods
Order required development of new Tools (Moulds) to be retained in India by Mr. B
Mr. A in Canada
Whether supply of goods qualify as exports
Ans:- Since the goods do not move outside the territory of India. So it cannot be termed as exports
Goods Retained and Not delivered
Mr. B in Kerala
Export of goods
Return of goods by Mr. A to Mr. B
Duties payable on return
No Use old shipping bill
Mr. A in Canada
Mr. B in Kerala
M/s ABC of India
No tax invoices required to be issued in this case but the specified goods shall be accompanied with delivery challan issued in accordance with the provisions contained in rule 55 of the CGST rules
M/s ABC sends 100 units of specified goods out of India
In case the entire quantity of specified goods is brought back within the period of 6 months from the date of removal , no tax invoice is required to be issued as no supply has taken place in such a case
Mr. C staying outside India
In case ,the entire quantity of specified goods is neither sold nor brought back within 6 months from the date of removal, a tax invoice would be required to be issued for entire 100 units as per provisions contained sec 12 and sec 31 of CGST act.
M/s ABC of India
No tax invoices required to be issued in this case but the specified goods shall be accompanied with delivery Challan issued in accordance with the provisions contained in rule 55 of the CGST rules
M/s ABC sends 100 units of specified goods out of India
Mr. C staying outside India
If the remaining 40 units are not brought back within 6 months from the date removal, a tax invoice would be required to be issued for such 40 units as per provision of sec 12 & sec 31 of the CGST Act
A tax invoice would required to be issued for such 60 units at the time of each of such sale as per provision of sec 12 & sec 31 of the CGST Act
Whether e-way bill is required in the following cases-
Where goods transit through another State while moving from one area in a State to another area in the same State.
It may be noted that e-way bill generation is not dependent on whether a supply is inter State or not, but on whether the movement of goods is inter-State or not. Therefore, if the goods transit through a second State while moving from one place in a State to another place in the same State, an e-way bill is required to be generated.
Where goods move from a DTA unit to a SEZ unit or vice versa located in the same State.
Where goods move from a DTA unit to a SEZ unit or vice versa located in the same State, there is no requirement to generate an e-way bill, if the same has been exempted under rule 138(14)(d) of the CGST Rules.
(1) The shipping bill filed by 1a[an exporter of goods] shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when:-
a) the person in charge of the conveyance carrying the export goods duly files 36a[a departure manifest or] an export manifest or an export report covering the number and the date of shipping bills or bills of export; and
b) the applicant has furnished a valid return in FORM GSTR-3 2[or FORM GSTR-3B, as the case may be].
(2) The details of the 1[relevant export invoices in respect of export of goods] contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India:
[Provided that where the date for furnishing the details of outward supplies in FORM GSTR-1 for a tax period has been extended in exercise of the powers conferred under section 37 of the Act, the supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR1 after the return in FORM GSTR-3B has been furnished and the same shall be transmitted electronically by the common portal to the system designated by the Customs:
Provided further that the information in Table 6A furnished under the first proviso shall be auto-drafted in FORM GSTR-1 for the said tax period. ]
(3) Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-32[or FORM GSTR-3B, as the case may be] from the common portal, 4[the system designated by the Customs or the proper officer of Customs, as the case may be, shall process the claim of refund in respect of export of goods] and an amount equal to the integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities.
(4) The claim for refund shall be withheld where,-
a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or sub-section (11) of section 54; or
b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962.
(5) Where refund is withheld in accordance with the provisions of clause (a) of sub-rule (4), the proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the common portal.
(6) Upon transmission of the intimation under sub-rule (5), the proper officer of central tax or State tax or Union territory tax, as the case may be, shall pass an order in Part B of FORM GST RFD-07.
(7) Where the applicant becomes entitled to refund of the amount withheld under clause (a) of sub-rule (4), the concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to refund the amount after passing an order in FORM GST RFD-06.
(8) The Central Government may pay refund of the integrated tax to the Government of Bhutan on the exports to Bhutan for such class of goods as may be notified in this behalf and where such refund is paid to the Government of Bhutan, the exporter shall not be paid any refund of the integrated tax.
1 [ (9) The application for refund of integrated tax paid on the services exported out of India shall be filed in FORM GST RFD-01 and shall be dealt with in accordance with the provisions of rule 89.
2 [ (10) The persons claiming refund of integrated tax paid on exports of goods or services should not have -
a) received supplies on which the benefit of the Government of India, Ministry of Finance notification No. 48/2017-Central Tax, dated the 18th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1305 (E), dated the 18th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme or notification No. 40/2017 - Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320(E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 has been availed; or
b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme.]
SB001 Invalid SB details
Reason: Due to wrong shipping bill number furnished in GSTR 1/Table 6A.
Solution: Rectify details by making amendments in GSTR 1 by using Form 9A. Form 9A has been made available by GSTN w.e.f. 15.12.2017 in exporter’s login at the GST common portal.
SB002 EGM not filed
Solution: Exporter should approach their
• shipping line; or
• airline/carrier; to file the EGM immediately.
SB003 GSTIN Mismatch
Reason: GSTIN declared in the Shipping Bill does not match with the GSTIN mentioned in the corresponding GST return.
Solution: In this case too, the exporter has to make necessary changes in GSTR 1 by use of amendment Form 9A. Exporters should note that there is no provision of amendment in the shipping bill once the EGM is filed.
Reason: Mis-match of invoice number as declared in the invoice table of the shipping bill and that declared in the GSTR 1 for the same supply. This can happen due to:
• Typographical mistake while entering data in GSTR 1 or the
•The exporter uses two sets of invoices, one invoice for GST and another invoice for exports resulting in mismatch of invoice numbers.
Solution: It was conveyed and reiterated that there should not be any difference between commercial invoice and GST invoice after implementation of GST since as per the GST law, IGST is to be paid on the actual transaction value of the supply between the exporter and the consignee, which should be the same as the one declared In the commercial invoice. If SB005 is due to a data entry mistake in GSTR 1, it can be amended in Form 9A. But any mistake in the SB cannot be amended in Form 9A. But any mistake in the SB cannot be amended once EGM is filed. Also, if the exporter has used a separate invoice in the SB, he cannot include that in his GSTR 1 in lieu of his GST invoice. Thus, SB005 error, as of now, cannot be corrected by any amendment either in GSTR-1 or in the Shipping Bill. For these cases a mechanism is being considered by the Board to make the requisite corrections manually in line with the recent amendments in Rule 96 of the CGST Rules, 2017. The said mechanism is expected to be available shortly. It may, however be noted that these Interim workarounds shall only be available as a one time measure for the past SBs. It is advised that the exporters should take care so as not to repeat such mistakes in future and ensure that the same GST compliant export invoice is declared at both ends.
In cases of exports through ICDs, if the gateway EGM is not filed electronically or it contains some error, response code SB006 appears. It is noticed that gateway EGM In case of many ICD shipping bills have been manually filed, leading to such refunds not being processed. While the Customs at gateway ports are pursuing this matter with the shipping lines, the exporters can also approach their shipping line to file the EGMs electronically.
SB000 (Successfully Validated) is the response code which comes when all the decided parameters like GSTIN, SB number, invoice number etc. match between GSTN and Customs database. This code implies that the SB is ready for inclusion in the IGST refund scroll. However, it might happen that even with SB000, the SB does not appear in the refund scroll. This could be due to
(i) The exports might have been made under bond or LUT, hence not eligible for refund.
(ii)If a shipping bill covers multiple invoices, few of the Invoices might have been successfully validated with code SB000 whereas other invoices might be containing other types of error/s
(iii)Composite rate of drawback has been claimed For that SB during the transitional period between 01.07.2017 to 09.2017, thus making the SB ineligible for IGST refund.
(iv) Where the IGST claimed amount is less than Rs. 1000/-.
In all the above cases, the scroll amount shall automatically become zero and the SBs shall not be included in the refund scroll.
There are two more reasons where the SBs will figure in the temporary IGST scroll but not in the final scroll. This could happen if there is an alert/suspension on the IEC in ICES or if the account of the IEC is not validated by PFMS.
of
or
under
or Letter of Undertaking(1) Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish, prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to pay the tax due along with the interest specified under sub-section (1) of section 50 within a period of—
a) fifteen days after the expiry of three months 3[, or such further period as may be allowed by the Commissioner,] from the date of issue of the invoice for export, if the goods are not exported out of India; or
b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in (Convertible Foreign Exchange) 3a[or in Indian rupees, wherever permitted by the Reserve Bank of India]
(3)Where the goods are not exported within the time specified in sub-rule (1) and the registered person fails to pay the amount mentioned in the said sub-rule, the export as allowed under bond or Letter of Undertaking shall be withdrawn forthwith and the said amount shall be recovered from the registered person in accordance with the provisions of section79.
(4) The export as allowed under bond or Letter of Undertaking withdrawn in terms of sub-rule (3) shall be restored immediately when the registered person pays the amountdue.
(5)The Board, by way of notification, may specify the conditions and safeguards under which a Letter of Undertaking may be furnished in place of abond.
(6)The provisions of sub rule (1) shall apply, mutatis mutandis, in respect of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit without payment of integrated tax.
New Rule 96B Inserted:-
“96B. Recovery of refund of unutilised input tax credit or integrated tax paid on export of goods where export proceeds not realised.
–
(1) Where any refund of unutilised input tax credit on account of export of goods or of integrated tax paid on export of goods has been paid to an applicant but the sale proceeds in respect of such export goods have not been realised, in full or in part, in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, the person to whom the refund has been made shall deposit the amount so refunded, to the extent of non realization of sale proceeds, along with applicable interest within thirty days of the expiry of the said period or, as the case may be, the extended period, failing which the amount refunded shall be recovered in accordance with the provisions of section 73 or 74 of the Act, as the case may be, as is applicable for recovery of erroneous refund, along with interest under section 50:
Provided that where sale proceeds, or any part thereof, in respect of such export goods are not realised by the applicant within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but the Reserve Bank of India writes off the requirement of realization of sale proceeds on merits, the refund paid to the applicant shall not be recovered.
(2) Where the sale proceeds are realised by the applicant, in full or part, after the amount of refund has been recovered from him under sub-rule (1) and the applicant produces evidence about such realisation within a period of three months from the date of realisation of sale proceeds, the amount so recovered shall be refunded by the proper officer, to the applicant to the extent of realisation of sale proceeds, provided the sale proceeds have been realised within such extended period as permitted by the Reserve Bank of India.” .
Unutilised ITC (Export under LUT/BOND)
Step1:- Export Of Goods.
Step 2:- Refund
Step 3:- Export Proceeds not realized (Part or Full)
Within period allowed by FEMA
Integrated Tax Paid (Export on payment of Tax)
For Export of Services Non Realisation Rule 96A is applicable
Step 4:- Within expiry of 30 days from above said period
Deposit the refunded amount + interest
Time Period as per FEMA -9 months
Extended to 15 months due to Covid
Step 5:- On Non payment= Recovery of amount u/s 73 or 74
Step 6:- Realisation of export proceeds after recovery of refund amount AND evidence produced by applicant within three month from realization of sale proceeds
The Amount recovered be refunded
1. I hereby declare that the goods exported been availed / or availed at lower rate by us in respect of central tax and no refund is claimed by us in respect of the integrated tax paid on such supplies in terms of Section 54(3) of CGST/SGST Act.
2. I hereby declare that refund of input tax credit claimed does not include input tax credit availed on goods or services used for making Nil rated or fully exempted supplies.
3. I hereby declare that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person in terms of Rule 89(2)(l) of Central Goods and Services Tax (CGST) Rules, 2017.
4. I hereby declare that the GST refund application has been made to one authority only.
5. I hereby undertake that during any period of five years immediately preceding the tax period to which the claim for refund relates, I have not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
6. I hereby undertake to pay back to the government the amount of refund sanctioned along with interest in case it is found subsequently that the requirements of Section 16(2)(c) read with Section 42 of the CGST/SGSTAct have not been complied with in respect of the amount refunded.
New Clause in undertaking
“UNDERTAKING
Drafting Error
I hereby undertake to deposit to the Government the amount of refund sanctioned along with interest in case of nonreceipt of foreign exchange remittances as per the proviso to section 16 of the IGST Act, 2017 read with rule 96B of the CGST Rules 2017. Signature Name – Designation / Status”
Applicability
Quantum of provisional Refund
Time period
Form in which provisional refund is to be issued
Zero- rated supply of goods or services or both
90% of the refund amount
7 days of RFD-02
RFD-04 followed by RFD-05(Payment order)
• Refund application filed for Rs. 100
• Provisional refund issued Rs 90
• Proper officer identified
Rs 100 Rs 90
Refund of Credit not eligible Rs 30
Step 5: The applicant files an appeal against the order and the appellate authority decides wholly in the applicant’s favour. It is hereby clarified in such a case the petitioner would file a fresh refund claim for the said amount of Rs. 30/- under the option of claiming refund
“On Account of Assessment/Provisional Assessment/Appeal/Any other order” and if rejected then Rs 30/- shall be re-credited thereafter.
Step 1: Proper officer shall issue a show cause notice as to why credit of Rs 30 should not be rejected and why Rs 20 should not be recovered as per terms of Sec 73 or 74.
Step 2: The supplier shall file his reply.
Step 3: If the notice is decided against the applicant either the applicant shall pay Rs 20 along with applicable interest and penalty through DRC-03 or the proper officer shall issue DRC-07 and the amount shall be entered in the electronic liability register.
Step 4: Order passed for Rs 70/- and Rs 30/- is rejected. Excess amount of Rs 20 shall be added to liability register through DRC- 07
Step 5: After receiving an undertaking from the applicant to the effect that he shall not file an appeal the amount of Rs 30/- will be re-credited to the electronic credit ledger through PMT-03.
Step 6: The applicant files an appeal against the order and the appellate authority decides wholly in the applicant’s favour. It is hereby clarified in such a case the petitioner would file a fresh refund claim for the said amount of Rs. 20/- under the option of claiming refund “On Account of Assessment/Provisional Assessment/Appeal/Any other order” and if rejected then Rs 20/- shall be re-credited thereafter.
Step 1: Proper officer shall issue a show cause notice
[RFD-08] as to why credit of Rs (15+5) should not be rejected and why Rs. 15 should not be recovered in terms of Sec 73 or 74.
Step 2: The supplier shall file his reply.
[RFD-09]
Step 3: If the notice is decided against the applicant then either the applicant shall pay Rs 15 along with applicable interest and penalty through DRC-03 or the proper officer shall issue DRC-07 and the amount shall be entered in the the applicants' electronic liability register.
Step 4: Order passed for Rs 80/- and Rs 20/- is rejected.
[RFD06]
Step 5: After receiving an undertaking from the applicant to the effect that he shall not file an appeal the amount of Rs 20/- will be re-credited to the electronic credit ledger through PMT-03.
. Refund of unutilized input tax credit of compensation cess availed on inputs in cases where the final product is not subject to the levy of compensation cess:
Refund of GST Compensation cess is not available in case of Exports with payment o tax.
Registered persons may also make zero-rated supply of aluminum products on payment of integrated tax but they cannot utilize the credit of the compensation cess paid on coal for payment of integrated tax in view of the proviso to section 11(2) of the Cess Act, which allows the utilization of the input tax credit of cess, only for the payment of cess on the outward supplies. Accordingly, they cannot claim refund of compensation cess in case of zero-rated supply on payment of integrated tax.
However any person can claim refund of unutilized input tax credit of Compensation Cess in case of Export under Bond/ LUT .
(Can also refer Circular 1/1/2017-Compensation Cess)
Tariff Area)
• As per Section 2(19) of IGST Act, Special Economic Zone shall have the same meaning as assigned to it in clause (za) of Section 2 of the Special Economic Zones Act, 2005.
• The specific clause (za) of Section 2 provides that “Special Economic Zone in GST” means each Special Economic Zone notified under the proviso to sub-section (4) of section 3 and sub-section (1) of section 4 (including Free Trade and Warehousing Zone) and includes an existing Special Economic Zone.
• As per Clause 2(i) Domestic Tariff Area” means the whole of India but does not include the areas of the Special Economic Zones.
It is settled that SEZ is an area considered to be situated outside India and any supply to SEZ is zero
Sources of amount in cash ledger
Amount deposited by the applicant directly in his cash ledger.
Amount being credited to cash ledgers in TCS cases
E-commerce operators
Amount being credited to cash ledgers due to TDS Government suppliers
55. Tax deducted in accordance with the provisions of section 51 of the CGST Act or tax collected in accordance with the provisions of section 52 of the CGST Act is required to be paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8, as the case may be, by the deductor or the collector, as the case may be.
56. It has been reported that, there are instances where taxes so deducted or collected is deposited under the wrong head (e.g. an amount deducted as Central tax is deposited as Integrated tax/State tax), thereby creating excess balance in the cash ledger of the deductor or the collector as the case may be. Doubts have been raised on the fate of this excess balance of TDS/TCS in the cash ledger of the deductor or the collector. It is clarified that such excess balance may be claimed by the tax deductor or the collector as the excess balance in electronic cash ledger. In this case, the common portal would debit the amount so claimed as refund. However, in case where tax deducted or collected in excess is also paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8, as the case may be, and the said amount has been credited to the electronic cash ledger of the deductee, the deductee can adjust the same while discharging his output liability or he can claim refund of the same under the category "refund of excess balance in the electronic cash ledger".
Refund to deductor only when amount is not credited in electronic cash ledger ledger of deductee
Refund of TDS
Refund to deductee only when amount is credited in Electronic cash ledger
DEDUCTOR DEDUCTEE
Deemed exports?
Extracts of Notification 48/2017 CT NR
• Supply of goods by a registered person against AdvanceAuthorisation.
Circular 14/14/2017
(Procedure (Form A & Form B)
• Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation.
• Supply of goods by a registered person to Export Oriented Unit
• An undertaking shall have to be furnished by him stating that refund has been claimed only for those invoices which have been detailed in statement 5B for the tax period for which refund is being claimed and that he has not availed input tax credit on such invoices.
Only if recipient-
• does not avail input tax credit; and
• Furnishes an undertaking to the effect that the supplier may claim the refund.
If the exporter has availed
Then IGST paid is not available as refund except if the benefit of notification was availed for acquisition of capital goods. Rule 96(10).
Issue No. 1:-An advance is received by a supplier for a Service contract which subsequently got cancelled. The supplier has issued the invoice before supply of service and paid the GST thereon. Whether he can claim refund of tax paid or is he required to adjust his tax liability in his returns ?
Clarification:-In case GST is paid by the supplier on advances received for a future event which got cancelled subsequently and for which invoice is issued before supply of service, the supplier is required to issue a “credit note” in terms of section 34 of the CGST Act. He shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to conditions of section 34 of the CGST Act. There is no need to file a separate refund claim.
However, in cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under “Excess payment of tax, if any” through FORM GST RFD-01.
Issue No. 2:-An advance is received by a supplier for a Service contract which got cancelled subsequently. The supplier has issued receipt voucher and paid the GST on such advance received. Whether he can claim refund of tax paid on advance or he is required to adjust his tax liability in his returns?
Clarification:-In case GST is paid by the supplier on advances received for an event which got cancelled subsequently and for which no invoice has been issued in terms of section 31 (2) of the CGST Act, he is required to issue a “refund voucher” in terms of section 31 (3) (e) of the CGST Act read with rule 51 of the CGST Rules. The taxpayer can apply for refund of GST paid on such advances by filing FORM GST RFD-01 under the category “Refund of excess payment of tax”.
If a supplier of service receives advance then :
Step 1: He has to issue Receipt Voucher as per Sec. 31(3)(d) read with Rule 50(Particulars of Receipt Voucher)
Step 2: Issue of Tax Invoice. As per Sec. 31(2) tax invoice is to be issued either Before or After the Provision of Service
Case 1
Receipt Voucher Issued u/s 31(3)(d) + Tax
Invoice Issued u/s 31(2) before Service
Case 2
Receipt Voucher Issued u/s 31(3)(d) but Tax
Invoice not yet Issued
Contract got Cancelled, Amount Refunded
Contract got Cancelled, Amount Refunded
The supplier is required to issue a “credit note” u/s 34
Details of such credit notes in the return for the month during which such credit note has been issued No Need of Refund Application
Tax Liability Adjusted
Required to issue a REFUND VOUCHER u/s 31(3)( e) read with Rule 51(Particulars of Refund Voucher)
The taxpayer can apply for refund of GST paid on such advances by filing FORM GST RFD-01 under the category “Refund of excess payment of tax”.
if No output liability against which a credit note can be adjusted Refund can be applied under the category “Refund of excess payment of tax”.
No criteria of Adjustment mentioned for Refund Voucher. Directly Refund?
Whereas Table 9 of GSTR-1 allows adjustment
Budget
(Effective date to be notified)
16(1) “zero rated supply” means any of the following supplies of goods or services or both, namely:––
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
16(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:––
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.
“zero rated supply” means any of the following supplies of goods or services or both, namely:––
(a) export of goods or services or both; or
(b) supply of goods or services or both for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit.
A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed: Provided that the registered person making zero rated supply of goods shall, in case of non-realisation of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner as may be prescribed.
Amendments in section 16 of IGST Act, 2017
(Effective date to be notified)
The Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify––
(i) a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid.” .
Rule 96B now provided sanctity by proviso to S. 16(3)
• Scope widened by covering Zero Rated as against only Exports under Rule 96B
• Proviso says that refund is liable to be recovered with interest if proceeds not received within time limit as provided in FEMA. For SEZ supplies, there is ambiguity as to Time Period.
Refund of output tax on exports(with Payment) shall be available to –
◦ Notified class of persons
◦ Notified class of goods or services
Restricted Scope of Zero Rated Supplies With Payment of Tax
Without payment of tax
Refund of unutilized input tax credit (ITC)of Input or input services on account of exports.
With payment of tax;
Refund of tax paid on export
Will be available Only for Notified Class of Taxpayers or notified supplies
CG
Rule 96The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India. No Separate Application Required. Services
Goods
This proposed amendment restricts the enjoyment of benefits of zero rating in case the supplies are made to SEZ developer or SEZ Unit in a way that now post this amendment the benefits will be available only to the supplies to SEZ developer or SEZ Unit which are for authorised operations and not for any other supplies. Such authorised operations must be as per the SEZ Act, Rules and other relevant notifications.
Before Amendment
• All the supplies to SEZ unit/ developer were considered as Zero Rated.
• At the time of refund, it was ensured whether these are for authorised operations.
• The said restriction was in Refund Rules, not part of parent Act.
Before Amendment
• Zero Rated supplies (Exports or SEZ) With payment of tax was allowed to all supplies
After Amendment
• Supplies to SEZ unit / developer would be considered as zero rated only if these are for authorised operations, and if not these would be taxable supplies.
• Such authorised operations must be as per SEZ Act.
After Amendment
• In case of supplies to SEZ units/ developers:only to the notified class of person.
• In case of export of goods/ services:- only to notified class of persons and notified class of goods/ services.
Step1:- Export Of Goods.
For Export of Services Non Realisation Rule
96A is applicable
Step 2:- Refund
Supply of Goods to SEZ
Unutilised ITC
Step 3:- Sale Proceeds (Foreign Exchange) not realized (Part or Full)
Within period allowed by FEMA
Step 4:- Within expiry of 30 days from above said period
Deposit the refunded amount + interest
Step 5:- On Non payment= Recovery of amount u/s 73 or 74
Remittance in case of EXPORTS OF GOODS with REFUND (SEZ not covered)
Time Period as per FEMA -9 months
Extended to 15 months due to Covid
Step 6:- Realisation of proceeds after recovery of refund amount AND evidence produced by applicant within three month from realization of sale proceeds
The Amount recovered be refunded
• In some cases vendors of exporters claimed the bogus credits and discharged their liability through such credit. Because of these reasons Govt wants to restrict that IGST refund option only to few Organized Sectors.
• Under with payment of tax method, there was encashment of ITC of capital goods, which will not be available.
• Now the applications for refunds has to be made by exporters, from time to time.
The exporters were having an option
(i) to export with payment of IGST and claim refund thereof; or
(ii) to export without payment of Tax under LUT and claim refund thereof.
Section 16 of IGST Act has been amended to limit the option of making export with payment of duty. The option is not made limited to notified class of goods or suppliers. Thus, in all cases refund shall be available to persons of tax paid on inward supplies. Also, this would take away the benefit of claiming refund of tax paid on capital goods by way of using such tax for payment of IGST and claiming refund of such IGST so paid. Further, any person who has received refund but yet not received the payment against the export shall also be required to deposit the refund so received along with the applicable interest under section 50 of the CGST Act within 30 days after the expiry of the time limit prescribed under the FEMA, for receipt of foreign exchange remittances. Whether the provision shall be used to recover refunds so granted in past shall be seen in coming days.
Goods entered for exports could be confiscated in situations of a wrongful claim for remission or refund of any duty or tax or levy in contravention of the provisions of the Customs Act, 1962 or any other law for the time being in force
There shall be levied a penalty not exceeding five times of the refund claimed on export of goods by utilizing Input Tax Credit (under the GST Laws) on invoices obtained by fraud, collusion, wilful misstatement or suppression of facts.
3. Common Customs Electronic Portal to be notified by the CBIC for facilitating registration, filing of bill of entry, shipping bills, payment of duty and other documents/ forms prescribed under the Customs Act or any other law for the time being in force. Provisions have been inserted to allow amendments of documents (bill of entry, shipping bill etc.) using the customs automated system based on certain criteria. Furthermore, documents can be amended on the Common Portal by the importer or exporter in certain situations to be specified by the CBIC. Amendment has been proposed for enabling online service of orders, decisions, summons, or notices issued under the Customs Act, 1962 or Rules thereunder on the common portal.
4. Any conditional exemption notification issued henceforth shall be valid for 2 years till March 31 falling immediately from the date of such grant or variation. Further, any exemption which is in force as on the date on which Finance Bill 2021 receives Presidential assent, the period of 2 years shall be reckoned from February 1, 2021 and shall remain valid until March 31, 2023
5. The importer of goods is now required to present the bill of entry one day (including holidays) prior to arrival of the aircraft/ vehicle/ vessel at the custom station. Previously, bill of entry was to be presented by end of the next day following the day (excluding holidays) on which the aircraft/ vessel/ vehicle arrives at the custom station. Further, CBIC in certain cases may specify the time limit for presentation of the bill of entry which shall not be later than the date of arrival of the vessel/ aircraft/ vehicle
EXPORT ENTERED AS TAXABLE INADVERTANTLY BY TAXPAYER THUS UNABLE TO CLAIM REFUND OF WRONGLY ENTERED
This was because of a validation check placed on the common portal which prevented the value of refund of integrated tax/cess in FORM GST RFD-01A from being more than the amount of integrated tax/cess declared in table 3.1(b) of FORM GSTR-3B.
it is clarified that for the tax periods commencing from 01.07.2017 to 31.03.2021, such registered persons shall be allowed to file the refund application in FORM GST RFD-01 on the common portal subject to the condition that the amount of refund of integrated tax/cess claimed shall not be more than the aggregate amount of integrated tax/cess mentioned in the Table under columns 3.1(a), 3.1(b) and 3.1(c) of FORM GSTR-3B filed for the corresponding tax period.”
Issue No. 3:-Goods supplied by a supplier under cover of a tax invoice are returned by the recipient. Whether he can claim refund of tax paid or is he required to adjust his tax liability in his returns ?
Clarification:- In such a case where the goods supplied by a supplier are returned by the recipient and where tax invoice had been issued, the supplier is required to issue a “credit note” in terms of section 34 of the CGST Act. He shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to conditions of section 34 of the CGST Act. There is no need to file a separate refund claim in such a case.
However, in cases where there is no output liability against which a credit note can be adjusted, registered persons may proceed to file a claim under “Excess payment of tax, if any” through FORM GST RFD-01.
Issue No. 4:- Letter of Undertaking (LUT) furnished for the purposes of zero rated supplies as per provisions of section 16 of the Integrated Goods and Services Tax Act, 2017 read with rule 96A of the CGST Rules has expired on 31.03.2020. Whether a registered person can still make a zero-rated supply on such LUT and claim refund accordingly or does he have to make such supplies on payment of IGST and claim refund of such IGST ?
Clarification:- Notification No. 37/2017-Central Tax, dated 04.10.2017, requires LUT to be furnished for a financial year. However, in terms of notification No. 35/2020 Central Tax dated 03.04.2020, where the requirement under the GST Law for furnishing of any report, document, return, statement or such other record falls during between the period from 20.03.2020 to 29.06.2020, has been extended till 30.06.2020. Therefore, in terms of Notification No. 35/2020-Central Tax, time limit for filing of LUT for the year 2020-21 shall stand extended to 30.06.2020 and the taxpayer can continue to make the supply without payment of tax under LUT provided that the FORM GST RFD-11 for 2020-21 is furnished on or before 30.06.2020. Taxpayers may quote the reference no of the LUT for the year 2019-20 in the relevant documents.
Issue No. 6:-As per section 54 (1), a person is required to make an application before expiry of two years from the relevant date. If in a particular case, date for making an application for refund expires on 31.03.2020, can such person make an application for refund before 29.07.2020?
Clarification:- As per notification No. 35/2020-Central Tax dated 03.04.2020, where the timeline for any compliance required as per sub-section (1) of section 54 of the Central Goods and Services Tax Act, 2017 falls during the period from 20.03.2020 to 29.06.2020, the same has been extended till 30.06.2020. Accordingly, the due date for filing an application for refund falling during the said period has also been extended till 30.06.2020.
Refund of unutilized ITC on account of exports without payment of tax
Declaration under second and third proviso to section 54(3)
Copy of GSTR-2A of the relevant period
Undertaking in relation to sections 16(2)(c) and section Statement of invoices (Annexure-B) 42(2)
Statement 3 under rule 89(2)(b) and rule
89(2)(c)
Statement 3A under rule
89(4)
Declaration under second and third proviso to section 54(3)
Self-certified copies of invoices entered in Annexure-B whose details are not found in GSTR2A of the relevant period
BRC/FIRC in case of export of services and shipping bill (only in case of exports made through non-EDI ports) in case of goods
BRC/FIRC /any other document indicating the receipt of sale proceeds of services
Undertaking in relation to sections 16(2)(c) and section Copy of GSTR-2A of the relevant period 42(2)
Statement of invoices (Annexure-B)
Refund of tax paid on export of services made with payment of tax
Statement 2 under rule
89(2)(c)
Self-certified copies of invoices entered in Annexure-A whose details are not found in GSTR2A of the relevant period
Self-declaration regarding non-prosecution under sub- rule (1) of rule 91 of the CGST Rules for availing provisional refund
Refund of unutilized ITC on account of Supplies made to SEZ units/develop er without payment of tax
Declaration under third proviso to section 54(3) Copy of GSTR-2Aof the relevant period
Statement 5 under rule 89(2)(d) and rule
89(2)(e)
Statement 5A under rule
89(4)
Declaration under rule
89(2)(f)
Refund of tax paid on supplies made to SEZ
Statement of invoices (Annexure-B)
Self-certified copies of invoices entered in Annexure- B whose details are not found in GSTR-2A of the relevant period
Endorsement(s) from the specified officer of the SEZ
Undertaking in relation to sections 16(2)(c) and section regarding receipt of goods/services for authorized 42(2
) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise
Declaration under second and third proviso to section 54(3)
operations under second proviso to rule
89(1)
Declaration under rule
89(2)(f)
Statement 4 under rule 89(2)(d) and rule
89(2)(e)
Endorsement(s) from the specified officer of the SEZ regarding receipt of goods/services for authorized operations under second proviso to rule 89(1)
Self-certified copies of invoices entered in Annexure- A whose details are not found in GSTR-2A of the relevant period
Undertaking in relation to sections 16(2)(c) and section sub-rule (1) of rule 91 of the CGST Rules for availing42(2
) Self-declaration under rule 89(2)(l) if amount claimed does not exceedAt
certification under rule 89(2)(m) otherwise
Self-declaration regarding non-prosecution under provisional refund
Refund of ITC unutilized on account of accumulation due to inverted tax structure
Declaration under second and third proviso to section
54(3)
Declaration under section 54(3)(ii)
Undertaking in relation to sections 16(2)(c) and section
42(2)
Statement 1 under rule
89(5)
Statement 1A under rule 89(2)(h)
Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise
Copy of GSTR-2A of the relevant period
Statement of invoices (Annexure-B)
Self-certified copies of invoices entered in Annexure- B whose details are not found in GSTR-2A of the relevant period
Refund to supplier of tax paid on deemed export supplies
Statement 5(B) under rule 89(2)(g)
Declaration under rule
89(2)(g)
Undertaking in relation to sections 16(2)(c) and section
42(2)
Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule
89(2)(m) otherwis e
Documents required under Notification No. 49/2017-Central Tax dated 18.10.2017 and Circular No. 14/14/2017-GST dated 06.11.2017
Refund to recipient of tax paid on deemed export supplies
Statement 5(B) under rule 89(2)(g)
Declaration under rule 89(2)(g)
Undertaking in relation to sections 16(2)(c) and section 42(2)
Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise
Documents required under Circular No. 14/14/2017-GST dated 06.11.2017
Refund of excess payment of tax
Statement 7 under rule 89(2)(k)
Undertaking in relation to sections 16(2)(c) and section 42(2)
Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise
Refund of tax paid on intra-state supply which is subsequently held to be an inter- state supply and vice versa
Statement 6 under rule
89(2)(j)
Undertaking in relation to sections 16(2)(c) and section 42(2)
Refund on account of assessment / provisional assessment / appeal / any other order
Undertaking in relation to sections 16(2)(c) and section 42(2)
Reference number of the order and a copy of theAssessment / Provisional Assessment / Appeal / Any Other Order
Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule
89(2)(m) otherwise
Undertaking in relation to sections 16(2)(c) and section 42(2)
Refund on account of any other ground or reason
Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule
89(2)(m) otherwis
Reference number/proof of payment of pre- deposit made earlier for which refund is being claimed
Documents in support of the claim
The Single Judge Bench of Justice G.R.Swaminathan set aside the order rejecting refund claim of CGST and IGST of the assessee wherein, the entire refund liability of Input Tax Credit got auto-populated under a single head i.e. State Goods and Services Tax instead of SGST, Central Goods and Service Tax and Integrated Goods and Services Tax. The court held that, if the assessee was otherwise eligible to refund, the refund claim ought not to be denied on the ground of technical glitches and error occurred due to auto-population in Goods and Service Tax Network software. Nothing can be more unfair.
The adjudicating authority while rejecting the refund claims of the appellant neither deficiency memo in Form GST RFD-03 nor show cause notice in Form RFD-08 has been issued and also any relevant provisions of law/rules for rejection of their refund claims has been discussed. Application remanded back to Adjudicating Authority
Refund cannot be withheld on ground of claiming Higher duty Drawback. The respondents are directed to immediately sanction the refund towards the IGST paid in respect to the goods exported i.e. 'Zero Rated Supplies' made vide the shipping bills. It appears that the writ applicant has also prayed to pay interest at the rate of 9% on the amount of refund from the date of shipping bill till the date on which the amount is actually paid. We may only say that if the refund of the principal amount is not sanctioned and actually paid to the writ applicant within the period of six weeks from the date of the receipt of this order, then interest would start accumulating at the rate of 9% and the amount shall be paid
4.
Issue: What if due to inadvertent error the exporter has made an incorrect reporting and has reported the turnover under the correct head in GSTR1
1.Wherein the Court was satisfied that, although the failure was on the part of petitioner to fill up the data in Tran 1 under the correct head, noted that the error was inadvertent and system ought to provide a faclility for rectification of bona fide errors which although is provided, however the deadline for making the revision coincided with the last date and thereby rendering the facility as impractical and meaningless. 2019 (11) TMI 1248 ,AGMAN Services Vs UOI & ORS. (Delhi HC)
Hon’ble Karnataka HC in case of Wipro, agreed to the taxpayers contention that the assessment should be made basis the revised returns filed by the assessee. In the impugned case, the exporter has corrected the error while filing the Annual returns, the refund claim may hence be allowed basis the same.
5. 2019-VIL-315-GUJ
M/s Amit Cotton Industries vs. Principal Commissioner of Customs
GST- Refund claim of IGST paid in regard to the goods exported i.e.’Zero Rated Supplies’- legal embargo on availing the drawback at the rate of 1% higher rate and refund of the IGST paid in regard to the ‘Zero Rated Supply’. Department stance that as the applicant had availed higher duty drawback, and as there is no provision for accepting the refund of such higher duty drawback, the applicant is not entitled to seek the refund of the IGST paid in connection with the goods exported,i.e. ‘Zero rated supplies’-Section 54 of CGST Act 2017 & Section 16 of IGST Act 2017 & Ruke96 of CGST Rules
2017-Held- there is no force in the stance of the respondents that although the applicant might have returned the differential drawback amount, yet as there is no option available in the system to consider the claim for refund of the IGST the Circular No.37/2018- Customs dated 9th October 2018 upon which reliance has been placed, cannot be said to have any legal force. The circular cannot run contrary to the statutory rules, more particularly, Rule 96 of CGST Rules 2017-Apart from being merely in the form of instructions or guidance to the concered department, the circular is dated 9th October 2018, whereas the export took place on 27th July 2017. Further, the circular explains the provisions of the drawback and it has nothing to do with the IGST refund. Thus, the circular will not save the situation for the respondents- the applicant is entitled to claim the refund of the IGST- The respondents are directed to sanction the refund of the IGST paid in regard to the goods exported i.e.
8. Whether period of limitation would apply in case of refund of tax paid on account of incorrect interpretation of law?-Answered
The SEZ unit/developers shall not claim any refund against input tax credit (“ITC”) involved in supplies received by them from non-SEZ suppliers and GST Law facilitates eligibility for refund claim to suppliers who made supplies to SEZ unit/developers with payment of tax as zero rated supply under Section 16(1) of the Integrated Goods and Services Tax Act, 2017 (“IGSTAct”)
Rule 96(10) Validity: Sub-rule (10) provides for the exemption for AA license holders importing goods from levy of customs duties and IGST. Therefore preferred this petition before Gujarat High Court challenging the aforesaid notifications and amendments made in sub-rule 10 of Rule-96 of the CGST Rules, by Notification No. 54/2018 denying the option to claim rebate to the petitioner for importing goods under AA Licenses being ultra-vires the provisions of the CGST Act and the CGST Rules made thereunder and Article 14 of the Constitution of India. Held , Rule 96(10) is intra-vires to the provisions of the CGST ActThe Gujarat HC judgment DRI and DGCEI have sent many notices to various Export houses, wherein they have taken the benefit of the BCD/IGST Exemption then consequently taken the benefit of Rule 96 (Refund of IGST paid on exports). However, both authorities have not finalized the Notice but have sent only intimations for collecting the import/export data.
536(Apex Court))
(Reference : Mafatlal Industries (1997) 5 SCC
The HC has referred to the landmark ruling of the Apex Court in case of Mafatlal Industries and stated that the answer would depend on whether the refund is on account of an unconstitutional levy or a case payment of tax due to incorrect interpretation of statue. In the former case, the period of limitation would not apply. However in the latter case, the period of limitation would apply.
The Writ Petition was filed challenging Rule 90(3) of CGST,2017 to the extent wherein rectification of deficiencies are treated as submission of fresh application for the purpose of computing limitation period for refund claim and grant of interest on delayed refund under CGST, 2017.The Hon’ble court had issued notice to govt. In this regard. Writ petition had been filed for a declaration that rule 90(3) is ultra vires Articles 14 and 19(1)(g) of Constitution of India as refund procedure in rule 90(3) of CGST Rules is arbitrary, illegal and ultra vires for reason that issuance of a deficiency memo effectively results in rejection of refund application without giving any opportunity of hearing to applicant
The CBIC vide Notification No. 15/2021-Central Tax, dated May 18, 2021 has issued ‘the Central Goods and Services Tax (Fourth Amendment) Rules, 2021’ to further amend the Central Goods and Services Tax Rules, 2017 (“CGST Rules”), in a following manner:
Inserted proviso under Rule 90(3) of the CGST Rules– The time period from the date of filing of the refund claim in FORM GST RFD-01 till the date of communication of the deficiencies in FORM GST RFD-03 by the proper officer, is to be excluded from the period of 2 years in case, fresh refund claim is filed after rectification of the deficiencies.
FROM date of filing of the refund claim
To date of communication of the deficiencies in FORM GST RFD-03
e.g Refund Time Barring 19th Jan
Application made 4th Jan
Case 1 ::::RFD-03 issued on 19th jan (Max 15 days)
Old law : Refund Time Barred as could not be Reapplied (Fresh Application) till 19th jan
New Law: Refund application can be made till 19th jan plus 15 days (Extended time allowed).
Case 2 ::::RFD-03 issued on 15th jan
Old law : Refund Time for making Fresh Application till 19th jan (Only 4 days)
New Law: Refund application can be made till 19th jan plus 11 days (Extended time allowed).
Various amendments in registration, refund and e-way bill Rules
The CBIC vide Notification No. 15/2021-Central Tax, dated May 18, 2021 has issued ‘the Central Goods and Services Tax (Fourth Amendment) Rules, 2021’ to further amend the Central Goods and Services Tax Rules, 2017 (“CGST Rules”), in a following manner:
Inserted sub-rule (4) to Rule 90 of the CGST Rules– Allowed registered person to withdraw the application of refund claim, by filing application in FORM GST RFD-01W before issuance of provisional refund sanction order in FORM GST RFD-04 or final refund sanction order in FORM GST RFD-06 or payment order in FORM GST RFD05 or refund withhold order in FORM GST RFD-07 or notice in FORM GST RFD-08.
Inserted sub-rule (5) to Rule 90 of the CGST Rules- On submission of application in FORM GST RFD-01W, any amount debited from electronic credit ledger or electronic cash ledger, shall be credited back to the ledger from which such debit was made.
Inserted FORM GST RFD-01W i.e., the application for withdrawal of refund application.
Omitted proviso to Rule 92(1) of the CGST Rules which dealt with the order giving details of the adjustment in Part A of FORM GST RFD-07, where the amount of refund is completely adjusted against any outstanding demand.
Substituted ‘Part B’ in Rule 92(1) of the CGST Rules with ‘Part A’- The proper officer or the Commissioner shall pass an order in ‘Part A’ instead of ‘Part B’ of FORM GST RFD-07, informing the person, the reasons for withholding the refund.
Inserted new proviso to Rule 92(2) of the CGST Rules w.r.t. passing of an order for release of withheld refund in Part B of FORM GST RFD-07, where the proper officer or the Commissioner is satisfied that the refund is no longer liable to be withheld.
Amended Rule 96(6) of the CGST Rules w.r.t. passing of an order in ‘Part A’ instead of ‘Part B’ of FORM GST RFD-07, upon transmission of the intimation for withholding refund.
Amended Rule 96(7) of the CGST Rules- Now, the jurisdictional officer, shall proceed to refund the amount by passing an order in FORM GST RFD-06 after passing an order for release of withheld refund in Part B of FORM GST RFD-07, where the registered person becomes entitled to refund of the amount withheld.
1. In Rule 10A of the said rules, with effect from the date as may be notified, -
Requirement of furnishing of the bank account details under GST.
(a) after the words “details of bank account”, the words “which is in name of the registered person and obtained on Permanent Account Number of the registered person” shall be inserted;
(b) the following proviso shall be inserted, namely:- “Provided that in case of a proprietorship concern, the Permanent Account Number of the proprietor shall also be linked with the Aadhaar number of the proprietor.”;
2.
After Rule 10A of the said rules, with effect from the date as may be notified, the following rule shall be inserted, namely: -
“Rule 10B. Aadhaar authentication for registered person . — The registered person, other than a person notified under sub-section (6D) of section 25, who has been issued a certificate of registration under rule 10 shall, undergo authentication of the Aadhaar number of the
in order to be eligible for the purposes as specified in column (2) of the Table below:
Provided that if Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents, namely: –
(a) her/his Aadhaar Enrolment ID slip; and
(i) Bank passbook with photograph; or
(ii) Voter identity card issued by the Election Commission of India; or
(iii) Passport; or
(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988
(59 of 1988):
Provided further that such person shall undergo the authentication of Aadhaar number within a period of thirty days of the allotment of the Aadhaar number.” ;
4.
In Rule 23 of the said rules, in sub-rule (1), with effect from the date as may be notified, after the words “on his own motion, may”, the words, figures and letter “ subject to the provisions of rule 10B,” shall be inserted
Restrictions on Inputs/ Capital Goods sent for Job Work
In Rule 45 of the said rules, in sub-rule (3), with effect from the 1st day of October, 2021, -
(i) for the words “during a quarter”, the words “during a specified period” shall be substituted;
(ii) for the words “the said quarter”, the words “the said period” shall be substituted;
(iii) after the proviso, the following explanation shall be inserted, namely: -
“Explanation. - For the purposes of this sub-rule, the expression “specified period” shall mean.-
(a) the period of six consecutive months commencing on the 1st day of April and the 1st day of October in respect of a principal whose aggregate turnover during the immediately preceding financial year exceeds five crore rupees; and
(b) a financial year in any other case.” ;
5. In Rule 59 of the said rules, in sub-rule (6), with effect from the 1st day of January, 2022, -
(i) in clause (a), for the words “for preceding two months”, the words “for the preceding month” shall be substituted;
(ii) clause (c) shall be omitted
6.
(i) In Rule 89 in sub-rule (1), with effect from the date as may be notified, after the words “may file”, the words “, subject to the provisions of rule 10B,” shall be inserted;
(ii) after sub-rule (1), the following sub-rule shall be inserted, namely:- “(1A) Any person, claiming refund under section 77 of the Act of any tax paid by him, in respect of a transaction considered by him to be an intra-State supply, which is subsequently held to be an inter-State supply, may, before the expiry of a period of two years from the date of payment of the tax on the inter-State supply, file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that the said application may, as regard to any payment of tax on interState supply before coming into force of this sub-rule, be filed before the expiry of a period of two years from the date on which this sub-rule comes into force.” ;
In Rule 96 of the said rules, in sub-rule (1), after clause (b), with effect from the date as may be notified, the following clause shall be inserted, namely:-
“(c) the applicant has undergone Aadhaar authentication in the manner provided in rule 10B;” ;
Recovery of refund of unutilized iTC or IGST paid on export of goods where export proceeds not realized
8. After Rule 96B of the said rules, with effect from the date as may be notified, the following rule shall be inserted, namely:-
“96C. Bank Account for credit of refund.- For the purposes of sub-rule (3) of Rule 91, sub-rule (4) of Rule 92 and Rule 94, “bank account” shall mean such bank account of the applicant which is in the name of applicant and obtained on his Permanent Account Number: Provided that in case of a proprietorship concern, the Permanent Account Number of the proprietor shall also be linked with the Aadhaar number of the proprietor.” ;
Grant of Provisional Refund
Refund of IGST paid on goods and services exported out of India Order sanctioning Refund
Order sanctioning interest on delayed refund
Notification No. 36/2021 – Central Tax dated 24.09.2021
Makes Amendment in the Notification No. 03/2021-Central Tax, dated the 23rd February, 2021
In the said notification, in the first paragraph after the words “hereby notifies that the provisions of”, the words, brackets, figure and letter “sub-section (6A) or” shall be inserted.
The extract of the Notification No. 03/2021-Central Tax dated the 23rd February, 2021
is given below for reference:
The Government, on the recommendations of the Council and in suppression of Notification no. 17/2020 CT dt 24.03.2020 hereby notifies that the provisions of sub-section (6B) & (6C) OF Section 25 of the act shall NOT apply to :
(a) Not a citizen of India or
(b) A Department or Establishment of the Central government or State Government
(c) A local authority or
(d) A statutory body or
(e) A public sector undertaking or
(f) A person applying for registration under provisions of Sec 25(9)
dated the 25th September, 2021
Clarification in respect of refund of tax specified in section 77(1) of the CGST Act and section 19(1) of the IGST Act -Reg Section 77 of the CGST Act, 2017 reads as follows:
“
77. Tax wrongfully collected and paid to Central Government or State Government.
(1) A registered person who has paid the Central tax and State tax or, as the case may be, the Central tax and the Union territory tax on a transaction considered by him to be an intraState supply, but which is subsequently held to be an inter-State supply, shall be refunded the amount of taxes so paid in such manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid integrated tax on a transaction considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall not be required to pay any interest on the amount of central tax and State tax or, as the case may be, the Central tax and the Union territory tax payable.”
Section 19 of the IGST Act, 2017 reads as follows:
“19. Tax wrongfully collected and paid to Central Government or State Government
(1) A registered person who has paid integrated tax on a supply considered by him to be an inter-State supply, but which is subsequently held to be an intra-State supply, shall be granted refund of the amount of integrated tax so paid in such manner and subject to such conditions as may be prescribed.
(2) A registered person who has paid central tax and State tax or Union territory tax, as the case may be, on a transaction considered by him to be an intra-State supply, but which is subsequently held to be an inter-State supply, shall not be required to pay any interest on the amount of integrated tax payable.”
Whether refund claim under the said sections is available only when held by tax officers as intra-State and inter-State respectively, either on scrutiny/ assessment/ audit/ investigation, or as a result of any adjudication, appellate or any other proceeding or is subsequently found by taxpayer himself?
it is clarified that the term “subsequently held” in section 77 of CGST Act, 2017 or under section 19 of IGST Act, 2017 covers both the cases where the inter-State or intra-State supply made by a taxpayer, is either subsequently found by taxpayer himself as intra-State or inter-State respectively or where the inter-State or intra-State supply made by a taxpayer is subsequently found/ held as intra-State or inter-State respectively by the tax officer in any proceeding. Accordingly, refund claim under the said sections can be claimed by the taxpayer in both the above mentioned situations, provided the taxpayer pays the required amount of tax in the correct head.
In order to prescribe the manner and conditions for refund under section 77 of the CGST Act and section 19 of the IGST Act, sub-rule (1A) has been inserted after sub-rule (1) of rule 89 of the Central Goods and Services Tax Rules, 2017 Circular No. 162/18/2021-GST (hereinafter referred to as “CGST Rules”) vide notification No. 35/2021-Central Tax dated 24.09.2021. The said sub-rule (1A) of rule 89 of CGST Rules, 2017 reads as follows:
“(1A) Any person, claiming refund under section 77 of the Act of any tax paid by him, in respect of a transaction considered by him to be an intra-State supply, which is subsequently held to be an interState supply, may, before the expiry of a period of two years from the date of payment of the tax on the inter-State supply, file an application electronically in FORM GST RFD-01 through the common portal, either directly or through a Facilitation Centre notified by the Commissioner: Provided that the said application may, as regard to any payment of tax on inter-State supply before coming into force of this sub-rule, be filed before the expiry of a period of two years from the date on which this sub-rule comes into force.”
However, in cases, where the taxpayer has made the payment in the correct head before the date of issuance of notification No.35/2021-Central Tax dated 24.09.2021, the refund application under section 77 of the CGST Act/ section 19 of the IGST Act can be filed before the expiry of two years from the date of issuance of the said notification. i.e. from 24.09.2021.
Application of sub-rule (1A) of rule 89 read with section 77 of the CGST Act / section 19 of the IGST Act is explained through following illustrations.
A taxpayer “A” has issued the invoice dated 10.03.2018 charging CGST and SGST on a transaction and accordingly paid the applicable tax (CGST and SGST) in the return for March, 2018 tax period. The following scenarios are explained hereunder:
It is also clarified that any refund applications filed, whether pending or disposed off, before issuance of notification No.35/2021-Central Tax, dated 24.09.2021, would also be dealt in accordance with the provisions of rule 89 (1A) of the CGST Rules, 2017.
Refund under section 77 of the CGST Act / section 19 of the IGST Act would not be available where the taxpayer has made tax adjustment through issuance of credit note under section 34 of the CGST Act in respect of the said transaction.
CIRCULAR NO. 166/22/2021-GST
DATED THE 17TH NOVEMBER 2021
Whether the provisions of sub- section (1) of section 54 of the CGST Act regarding time period, within which an application for refund can be filed, would be applicable in cases of refund of excess balance in electronic cash ledger?
No, the provisions of sub-section (1) of section 54 of the CGST Act regarding time period, within which an application for refund can be filed, would not be applicable in cases of refund of excess balance in electronic cash ledger.
Whether certification/ declaration under Rule 89(2)(l) or 89(2)(m) of CGST Rules, 2017 is required to be furnished along with the application for refund of excess balance in electronic cash ledger?
No, furnishing of certification/ declaration under Rule 89(2)(l) or 89(2)(m) of the CGST Rules, 2017 for not passing the incidence of tax to any other person is not required in cases of refund of excess balance in electronic cash ledger as unjust enrichment clause is not applicable in such cases.
Whether refund of TDS/TCS deposited in electronic cash ledger under the provisions of section 51 /52 of the CGST Act can be refunded as excess balance in cash ledger?
. The amount deducted/collected as TDS/TCS by TDS/ TCS deductors under the provisions of section 51 /52 of the CGST Act, as the case may be, and credited to electronic cash ledger of the registered person, is equivalent to cash deposited in electronic cash ledger. It is not mandatory for the registered person to utilise the TDS/TCS amount credited to his electronic cash ledger only for the purpose for discharging tax liability. The registered person is at full liberty to discharge his tax liability in respect of the supplies made by him during a tax period, either through debit in electronic credit ledger or through debit in electronic cash ledger, as per his choice and availability of balance in the said ledgers. Any amount, which remains unutilized in electronic cash ledger, after discharge of tax dues and other dues payable under CGST Act and rules made thereunder, can be refunded to the registered person as excess balance in electronic cash ledger in accordance with the proviso to sub-section (1) of section 54, read with sub-section (6) of section 49 of CGST Act.
Whether relevant date for the refund of tax paid on supplies regarded as deemed export by recipient is to be determined as per clause (b) of Explanation (2) under section 54 of CGST Act and if so, whether the date of return filed by the supplier or date of return filed by the recipient will be relevant for the purpose of determining relevant date for such refunds?
Clause (b) of Explanation (2) under Section 54 of CGST Act reads as under:
“(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;”
On perusal of the above, it is clear that clause (b) of Explanation (2) under section 54 of the CGST Act is applicable for determining relevant date in respect of refund of amount of tax paid on the supply of goods regarded as deemed exports, irrespective of the fact whether the refund claim is filed by the supplier or by the recipient.
Further, as the tax on the supply of goods, regarded as deemed export, would be paid by the supplier in his return, therefore, the relevant date for purpose of filing of refund claim for refund of tax paid on such supplies would be the date of filing of return, related to such supplies, by the supplier.
No. 14/2022-CT
Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A
Where a registered person deposits the amount of erroneous refund sanctioned to him, –
RULE 86(4B)
inserted
N 14/2022
(a) under sub-section (3) of section 54 of the Act, or
(b) under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96, along with interest and penalty, wherever applicable, through FORM GST DRC-03, by debiting the electronic cash ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.
CATEGORIES OF REFUND sanctioned erroneously, where re-credit of amount in the electronic credit ledger can be done through FORM GST PMT-03A
(a) Refund of IGST obtained in contravention of sub-rule (10) of rule 96.
(b) Refund of unutilized ITC on account of export of goods/services without payment of tax.
(c) Refund of unutilized ITC on account of zero-rated supply of goods/services to SEZ developer/Unit without payment of tax.
(d) Refund of unutilized ITC due to inverted tax structure.
• The taxpayer shall deposit the amount of erroneous refund along with applicable interest and penalty, wherever applicable, through FORM GST DRC-03 by debit of amount from electronic cash ledger
• Till the time an automated functionality for handling such cases is developed on the portal, the taxpayer shall make a written request, in format enclosed as Annexure-A, to jurisdictional proper officer to re-credit the amount equivalent to the amount of refund thus paid back through FORM GST DRC-03, to electronic credit ledger.
• The proper officer, on being satisfied shall re-credit an amount in electronic credit ledger, equivalent to the amount of erroneous refund so deposited by the registered person, by passing an order in FORM GST PMT-03A, preferably within a period of 30 days from the date of receipt of request for re-credit of erroneous refund amount so deposited or from the date of payment of full amount of erroneous refund along with applicable interest, and penalty.
g Balance in ECRL was Rs 1000 out of which Rs 100 was ineliglible When refund applied amount deducted from ECrL was 1000 Rs 900 was given as refund Rs 100 being ineligible deducted but not provided as refund But person is made to pay Rs 100 in Cash thru DRC 03 Now he is at loss as amount is deducted from ECrL also and paid in Cash also So, now the amount deducted from ECrL will be recredited through PMT 03 .
Manner of filing refund of unutilized ITC on account of export of electricity
STATEMENT 3B
RULE 89(2)(ba) inserted N 14/2022
Special Procedure as No Shipping Bill required for Electricity Export. Till necessary changes on portal not made apply refund in “Any Other Category”
“A statement containing the number and date of the export invoices, details of energy exported, tariff per unit for export of electricity as per agreement, along with the copy of statement of scheduled energy for exported electricity by Generation Plants issued by the Regional Power Committee Secretariat as a part of the Regional Energy Account (REA) under clause (nnn) of sub regulation 1 of Regulation 2 of the Central Electricity Regulatory Commission (Indian Electricity Grid Code) Regulations, 2010 and the copy of agreement detailing the tariff per unit, in case where refund is on account of export of electricity;”
Procedure for filing and processing of refund of unutilised ITC on account of export of electricity.
The applicant would be required to file the application for refund under “Any Other” in FORM RFD-01. In remark column of the application, the taxpayer would enter “Export of electricity- without payment of tax (accumulated ITC)”.
a) Statement 3B of FORM GST RFD-01 (in pdf format), containing the number and date of the export invoices, details of energy exported, tariff per unit for export of electricity as per agreement.
b) The copy of statement of scheduled energy for electricity exported by the Generation Plants (in format attached as provided in notification).
c) The copy of the relevant agreement(s) detailing the tariff per unit for the electricity exported.
d) Details of calculation of the refund amount in Statement -3A of FORM GST RFD-01 by uploading the same in PDF FORMAT.
RELEVANT DATE FOR FILING THE REFUND
The relevant date shall be the last date of the month, in which the electricity has been exported as per monthly Regional Energy Account (REA) issued by the Regional Power Committee Secretariat under regulation 2(1)(nnn) of the CERC (Indian Electricity Grid Code) Regulations, 2010.
FORMULA SAME AS IN RULE 89(4)- For calculation of refund of unutilized ITC on account of zero rate supplies :
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero rated supply of services) x Net ITC ÷Adjusted Total Turnover
The turnover of export of electricity would be calculated by multiplying the energy exported during the period of refund with the tariff per unit of electricity, specified in the agreement.
Adjusted Total Turnover shall be calculated as per Rule 89E(4).
The turnover of electricity supplied domestically would be excluded while calculating the adjusted total turnover.
The quantum of Scheduled Energy exported, as reflected in the Regional Energy Account (REA) issued by Regional Power Committee (RPC) Secretariat for a particular month, will be deemed to be the quantity of electricity exported during the said month
The quantum of electricity exported as specified in the statement of scheduled energy exported and on invoice should be SAME.
In case it is DIFFERENT , turnover of export of electricity shall be calculated using the lower of
• quantum of electricity exported mentioned on the statement of scheduled energy exported and
• that mentioned on the invoice issued on account of export of electricity.
• The proper officer shall calculate the admissible refund amount as per the formula provided under rule 89(4) and the circular clarification.
• Further, upon scrutiny of the application for completeness and eligibility, if the proper officer is satisfied, he shall request the applicant, in writing, if required, to debit the said amount from the electronic credit ledger through FORM GST DRC-03.
• Once the proof of such debit is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD-06 and the payment order in FORM GST RFD-05.
Supply by Duty Free Shops (DFS) to outgoing international passenger to be treated as exports and consequential refund benefit made available.
N 14/2022
RULE 95A
OMITTED w.e.f. 1/7/2019
Rule 95A was limiting the refund option only on goods and with the omission of this rule, the intention appears to allow refund on input services as well.
CIRCULAR 176/02/2022
CIRCULAR 106/25/2019
WITHDRAWN
This circular was allowing refund GST paid on inward supply of indigenous goods ONLY by retail outlets established at departure area of the international airport beyond immigration counters when supplied to outgoing international tourist against foreign exchange.
Hence, supplies made by retail outlets situated in departure area of international airport treated to be ‘zero rate supplies’ and thereby allowing refund of input services as well.
Clause(b) of Rule 96(1) substituted
(b) the applicant has furnished a valid return in FORM GSTR-3B
Clauses 5A and 5B of Rule 96 inserted
Provided that if there is any mismatch between the data furnished by the exporter of goods in Shipping Bill and those furnished in statement of outward supplies in FORM GSTR-1,
Then such application for refund of integrated tax paid on the goods exported out of India shall be deemed to have been filed on such date when such mismatch in respect of the said shipping bill is rectified by the exporter
• Where refund is withheld in case of exporter identified as a Risky exporter, then such refund claims shall be transmitted to the proper officer electronically in FORM GST RFD-01
• The said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission.
(5A) Where refund is withheld in accordance with the provisions of clause (a) or clause (c) of sub-rule (4) of Rule 96 , such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01 and the intimation of such transmission shall also be sent to the exporter electronically through the common portal, and notwithstanding anything to the contrary contained in any other rule, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission
(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or subsection (11) of section 54;
(c) the Commissioner in the Board or an officer authorised by the Board, on the basis of data analysis and risk parameters, is of the opinion that verification of credentials of the exporter, including the availment of ITC by the exporter, is considered essential before grant of refund, in order to safeguard the interest of revenue.
Rule 96
(4)
(5B) Where refund is withheld in accordance with the provisions of clause (b) of subrule (4) of Rule 96 and the proper officer of the Customs passes an order that the goods have been exported in violation of the provisions of the Customs Act, 1962 (52 of 1962), then, such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01 and the intimation of such transmission shall also be sent to the exporter electronically through the common portal, and notwithstanding anything to the contrary contained in any other rule, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission.
Instances have been brought to the notice where the unregistered buyers, who had entered into an agreement/ contract with a builder for supply of services of construction of flats/ building, etc. and had paid the amount towards consideration for such service, either fully or partially, along with applicable tax, had to get the said contract/ agreement cancelled subsequently due to non-completion or delay in construction activity in time or any other reasons.
In a number of such cases, the period for issuance of credit note on account of such cancellation of service under the provisions of section 34 of the Central Goods and Service Tax Act, 2017 (hereinafter referred to as ‘CGST Act’) may already have got expired by that time. In such cases, the supplier may refund the amount to the buyer, after deducting the amount of tax collected by him from the buyer.
1.2
• In cases of long-term insurance policies where premium for the entire period of term of policy is paid upfront along with applicable GST and the policy is subsequently required to be terminated prematurely due to some reasons.
• In some cases, the time period for issuing credit note under the provisions of section 34 of the CGST Act may have already expired and therefore, the insurance companies may refund only the proportionate premium net off GST.
1.3 Representations have been received requesting for providing a facility to such unregistered buyers/ recipients for claiming refund of amount of tax borne by them in the event of cancellation of the contract/agreement for supply of services of construction of flat/ building or on termination of long-term insurance policy.
2.
It would be pertinent to mention that sub-section (1) of section 54 of the CGST Act already provides that any person can claim refund of any tax and interest
if any, paid on such tax or any other amount paid by him, by making an application before the expiry of two years from the relevant date in such form and manner as may be prescribed.
Further, in terms of clause (e) of sub-section (8) of section 54 of the CGST Act, in cases where the unregistered person has borne the incidence of tax and not passed on the same to any other person, the said refund shall be paid to him instead of being credited to Consumer Welfare Fund (CWF).
2.1 In order to enable such unregistered person to file application for refund under subsection (1) of section 54, in cases where the contract/agreement for supply of services of construction of flat/ building has been cancelled or where long-term insurance policy has been terminated, a new functionality has been made available on the common portal which allows unregistered persons to take a temporary registration and apply for refund under the category ‘Refund for Unregistered person’.
Further, sub-rule (2) of rule 89 of Central Goods and Service Tax Rules, 2017 (hereinafter referred to as ‘CGST Rules’) has been amended and statement 8 has been inserted in FORM GST RFD-01 vide Notification No. 26/2022-Central Tax dated 26.12.2022 to provide for the documents required to be furnished along with the application of refund by the unregistered persons and the statement to be uploaded along with the said refund application.
In order to ensure uniformity in the implementation of the above provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the CGST Act, hereby clarifies the following:
4.1
The unregistered person, who wants to file an application for refund under sub-section (1) of section 54 of CGST Act, in cases where the contract/agreement for supply of services of construction of flat/ building has been cancelled or where long-term insurance policy has been terminated
shall obtain a temporary registration on the common portal using his Permanent Account Number (PAN). While doing so, the unregistered person shall select the same state/UT where his/her supplier, in respect of whose invoice refund is to be claimed, is registered. Thereafter, the unregistered person would be required to undergo Aadhaar authentication in terms of provisions of rule 10B of the CGST Rules.
Further, the unregistered person would be required to enter his bank account details in which he seeks to obtain the refund of the amount claimed. The applicant shall provide the details of the bank account which is in his name and has been obtained on his PAN.
4.2 The application for refund shall be filed in FORM GST RFD-01 on the common portal under the category ‘Refund for unregistered person’. The applicant shall upload statement 8 (in pdf format) and all the requisite documents as per the provisions of sub-rule (2) of rule 89 of the CGST Rules. The refund amount claimed shall not exceed the total amount of tax declared on the invoices in respect of which refund is being claimed. Further, the applicant shall also upload the certificate issued by the supplier in terms of clause (kb) of sub-rule (2) of rule 89 of the CGST Rules along with the refund application. The applicant shall also upload any other document(s) to support his claim that he has paid and borne the incidence of tax and that the said amount is refundable to him
4.3 Separate applications for refund have to be filed in respect of invoices issued by different suppliers. Further, where the suppliers, in respect of whose invoices refund is to be claimed, are registered in different States/UTs, the applicant shall obtain temporary registration in the each of the concerned States/UTs where the said supplier are registered.
4.4 Where the time period for issuance of credit note under section 34 of the CGST Act has not expired at the time of cancellation/termination of agreement/contract for supply of services, the concerned suppliers can issue credit note to the unregistered person. In such cases, the supplier would be in a position to also pay back the amount of tax collected by him from the unregistered person and therefore, there will be no need for filing refund claim by the unregistered persons in these cases. Accordingly, the refund claim can be filed by the unregistered persons only in those cases where at the time of cancellation/termination of agreement/contract for supply of services, the time period for issuance of credit note under section 34 of the CGST Act has already expired.
As per sub-section (1) of section 54 of the CGST Act, time period of two years from the relevant date has been specified for filing an application of refund.
Further, the relevant date in respect of cases of refund by a person other than supplier is the date of receipt of goods or services or both by such person in terms of provisions of clause (g) in Explanation (2) under section 54 of the CGST Act. However, in respect of cases where the supplier and the unregistered person (recipient) have entered into a long-term contract/ agreement for the supply, with the provision of making payment in advance or in instalments, for example construction of flats or long-term insurance policies, if the contract is cancelled/ terminated before completion of service for any reason, there may be no date of receipt of service, to the extent supply has not been made/ rendered. Therefore, in such type of cases, it has been decided that for the purpose of determining relevant date in terms of clause (g) of Explanation (2) under section 54 of the CGST Act, date of issuance of letter of cancellation of the contract/ agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant.
Sub-section (14) of section 54 of the CGST Act provides that no refund under subsection (5) or sub-section (6) shall be paid to an applicant, if amount is less than one thousand rupees. Therefore, no refund shall be claimed if the amount is less than one thousand rupees.
7.
The proper officer shall process the refund claim filed by the unregistered person in a manner similar to other RFD-01 claims.
The proper officer shall scrutinize the application with respect to completeness and eligibility of the refund claim to his satisfaction and issue the refund sanction order in FORM GST RFD-06 accordingly.
The proper officer shall also upload a detailed speaking order along with the refund sanction order in FORM GST RFD-06.
7.1
In cases where the amount paid back by the supplier to the unregistered person on cancellation/termination of agreement/contract for supply of services is less than amount paid by such unregistered person to the supplier,
Only the proportionate amount of tax involved in such amount paid back shall be refunded to the unregistered person.
Amendment in section 56
In section 56 of the Central Goods and Services Tax Act, for the words “from the date immediately after the expiry of sixty days from the date of receipt of application under the said subsection till the date of refund of such tax”, the words “for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax, to be computed in such manner and subject to such conditions and restrictions as may be prescribed” shall be substituted.
Section 147 of the Act seeks to amend section 56 of the Central Goods and Services Tax Act so as to provide by rules the manner of computation of period of delay for calculation of interest on delayed refunds.
(1) ……. (2) ……. (3) …….
(4) …….
(5) …….
90% provisional refund may be given without reducing the amount of ITC provisionally accepted
(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.
13/2022-CT
w.e.f 01.03.2020
• EXCLUSION OF TIME PERIOD (1.03.2020 TO 28.02.2022) for REFUND FILING AND ISSUANCE OF DEMAND ORDER
• It has been provided that while computing the period of limitation for recovery of erroneous refund & filing refund application, the period between 01.03.2020 to 28.02.2022 shall be excluded. The reason behind not considering the said period could be the adverse impacts COIVD-19 pandemic caused across the country which had hindered the smooth functioning of the business as well as the law-and-order system.
Disclaimer
The views expressed are solely of the author and the content of this document is solely for information purpose and not to be construed as a professional advice. In cases where the reader has any legal issues, he/she must in all cases seek independent legal advice.
