CBIC
Clarifications on Refund on Exports
· Refund of input tax credit where goods or services are
exported without payment of integrated tax.
·
It is emphasized that the proper officer shall not insist on the
submission of an invoice (either original or duplicate) the details of which
are present in FORM GSTR-2A of the relevant period submitted by the claimant.
· System validations in calculating
refund amount
· Re-credit of electronic credit
ledger in case of rejection of refund claim:
· The rejected amount shall be re-credited to the electronic
credit ledger of the claimant using FORM
GST RFD-01B only after the receipt of an undertaking from the claimant
to the effect that he shall not file an appeal against the said rejection
· Refund in rule 96(10) of the CGST
Rules of Concessional duty on input cases
· Registered persons, including importers, who are directly purchasing/importing supplies on
which the benefit of reduced tax incidence or no tax incidence under certain
specified notifications has been availed, shall not be eligible for refund of
integrated tax paid on export of goods or services.
· restriction under rule 96(10) of the CGST Rules, as amended
retrospectively by notification No. 39/2018-Central Tax, dated 04.09.2018,
applies only to those purchasers/importers who are directly
purchasing/importing supplies on which the benefit of certain notifications, as
specified in the said sub-rule, has been availed (Second sale at full GST will
get refund).
·
Disbursal of refund amount after sanctioning by the proper officer:
· On receipt of the provisional sanction order, the tax
officer of the counterpart State or Central administration has observed that
the provisional refund of input tax credit has been incorrectly sanctioned for
ineligible input tax credit and has therefore, refused to disburse the tax
amount pertaining to the same.
·
It is hereby
clarified that neither the State nor the Central tax authorities shall refuse
to disburse the amount sanctioned by the counterpart tax authority on any
grounds whatsoever, except under sub-section (11) of section 54 of the CGST
Act.
· Status of refund claim after
issuance of deficiency memo:
· In case a deficiency memo in FORM GST RFD-03 has been issued, the refund claim will have to be
filed afresh.
·
Field formations are
issuing show cause notices to the claimants in cases where the refund
application is not re-submitted after the issuance of a deficiency memo.
· It is clarified that show-cause-notices are not required to
be issued where deficiency memos have been issued.
· The limit of rupees one thousand shall be applied for each
tax head separately and not cumulatively. The limit would not apply in cases of
refund of excess balance in the electronic cash ledger.
·
Refund applications where the amount claimed is less than rupees one thousand
[Circular No. 59/33/2018-GST dated 4
September 2018]
Subject: Clarification on refund related issues
Various
representations have been received seeking clarification on issues relating to
refund. In order to clarify these issues and to ensure uniformity in the
implementation of the provisions of law across the field formations, the Board,
in exercise of its powers conferred by section 168 (1) of the Central Goods and
Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby
clarifies the issues as detailed hereunder:
2.
Submission of invoices for processing of claims of refund:
2.1
It was clarified vide Circular No. 37/11/2018-GST dated 15th March, 2018 that since the refund
claims were being filed in a semi-electronic environment and the processing was
completely based on the information provided by the claimants, it becomes
necessary that invoices are scrutinized. Accordingly, it was clarified that the
invoices relating to inputs, input services and capital goods were to be
submitted for processing of claims for refund of integrated tax where services
are exported with payment of integrated tax; and invoices relating to inputs
and input services were to be submitted for processing of claims for refund of
input tax credit where goods or services are exported without payment of
integrated tax.
2.2.
In this regard, trade and industry have represented that such requirement is
cumbersome and increases their compliance cost, especially where the number of
invoices is large.
2.3.
In view of the difficulties being faced by the claimants of refund, it has been
decided that the refund claim shall be accompanied by a print-out of FORM
GSTR-2A of the claimant for the relevant period for which the refund is
claimed. The proper officer shall rely upon FORM GSTR-2A as an evidence
of the accountal of the supply by the corresponding supplier in relation to
which the input tax credit has been availed by the claimant. It may be noted
that there may be situations in which FORM GSTR-2A may not contain the
details of all the invoices relating to the input tax credit availed, possibly
because the supplier’s FORM GSTR-1 was delayed or not filed. In such
situations, the proper officer may call for the hard copies of such invoices if
he deems it necessary for the examination of the claim for refund. It is
emphasized that the proper officer shall not insist on the submission of an
invoice (either original or duplicate) the details of which are present in FORM
GSTR-2A of the relevant period submitted by the claimant.
2.4.
The claimant shall also submit the details of the invoices on the basis of
which input tax credit had been availed during the relevant period for which
the refund is being claimed, in the format enclosed as Annexure-A manually
along with the application for refund claim in FORM GST RFD-01A and the
Application Reference Number (ARN). The claimant shall also declare the
eligibility or otherwise of the input tax credit availed against the invoices
related to the claim period in the said Annexure for enabling the proper
officer to determine the same.
3.
System validations in calculating refund amount
3.1.
Currently, in case of refund of unutilized input tax credit (ITC for short),
the common portal calculates the refundable amount as the least of the
following amounts:
a)
The maximum refund amount as per the formula in rule 89(4) or rule 89(5) of the
Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the
“CGST Rules”) [formula is applied on the consolidated amount of ITC, i.e.
Central tax + State tax/Union Territory tax +Integrated tax + Cess(wherever
applicable)];
b)
The balance in the electronic credit ledger of the claimant at the end of the
tax period for which the refund claim is being filed after the return for the
said period has been filed; and
c)
The balance in the electronic credit ledger of the claimant at the time of
filing the refund application.
3.2.
After calculating the least of the three amounts, as detailed above, the
equivalent amount is to be debited from the electronic credit ledger of the
claimant in the following order:
a)
Integrated tax, to the extent of balance available;
b)
Central tax and State tax/Union Territory tax, equally to the extent of balance
available and in the event of a shortfall in the balance available in a
particular electronic credit ledger (say, Central tax), the differential amount
is to be debited from the other electronic credit ledger (i.e., State tax/Union
Territory tax, in this case).
3.3.
The procedure described in para 3.2 above, however, is not presently available
on the common portal. Till the time such facility is made available on the
common portal, the taxpayers are advised to follow the order as explained above
for all refund applications filed after the date of issue of this Circular.
However, for applications already filed and pending with the tax authorities,
where this order is not adhered to by the claimant, no adverse view may be
taken by the tax authorities.
3.4.
The above system validations are being clarified so that there is no ambiguity
in relation to the process through which an application in FORM GST RFD-01A is
generated.
3.5.
Further, it may be noted that the refund application can be filed only after the
electronic credit ledger has been debited in the manner specified in para 3.2
(read with para
3.3)
above, and the ARN is generated on the common portal.
4.
Re-credit of electronic credit ledger in case of rejection of refund claim:
4.1.
In case of rejection of claim for refund of unutilized input tax credit on
account of ineligibility of the said credit under sub-sections (1),(2) or (5)
of section 17 of the CGST Act, or under any other provision of the Act and
rules made thereunder the proper officer shall order for the rejected amount to
be re-credited to the electronic credit ledger of the claimant using FORM
GST RFD-01B. For recovery of this amount, a demand notice shall have to be
simultaneously issued to the claimant under section 73 or 74 of the CGST Act,
as the case may be. In case the demand is confirmed by an order issued under
sub-section (9) of section 73, or sub-section (9) of section 74 of the CGST
Act, as the case may be, the said amount shall be added to the electronic
liability register of the claimant through FORM GST DRC-07.
Alternatively, the claimant can voluntarily pay this amount, along with
interest and penalty, if applicable, before service of the demand notice, and
intimate the same to the proper officer in FORM GST DRC-03 in accordance
with sub-section (5) of section 73 or sub-section (5) of section 74 of the CGST
Act, as the case may be, read with sub-rule (2) of rule 142 of the CGST Rules.
In such cases, the need for serving a demand notice will be obviated.
4.2.
In case of rejection of claim for refund of unutilized input tax credit, on
account of any reason other than the eligibility of credit, the rejected amount
shall be re-credited to the electronic credit ledger of the claimant using FORM
GST RFD-01B only after the receipt of an undertaking from the claimant to
the effect that he shall not file an appeal against the said rejection or in
case he files an appeal, the same is finally decided against the claimant, as
has been laid down in rule 93 of the CGST Rules.
4.3.
Consider an example where against a refund claim of Rs.100, only Rs.80 is
sanctioned (Rs.15 is rejected on account of ineligible ITC and Rs.5 is rejected
on account of any other reason). As described above, Rs.15 would be re-credited
with simultaneous issue of notice under section 73 or 74 of the CGST Act for
recovery of ineligible ITC. Rs.5 would be re-credited (through FORM GST
RFD-01B) only after the receipt of an undertaking from the claimant to the
effect that he shall not file an appeal or in case he files an appeal, the same
is finally decided against the claimant.
5.
Scope of rule 96(10) of the CGST Rules:
5.1
Rule 96(10) of the CGST Rules, as amended retrospectively by notification No. 39/2018-Central
Tax, dated 04.09.2018 provides that registered persons, including importers,
who are directly purchasing/importing supplies on which the benefit of
reduced tax incidence or no tax incidence under certain specified notifications
has been availed, shall not be eligible for refund of integrated tax paid on
export of goods or services. For example, an importer (X) who is importing
goods under the benefit of Advance Authorization/EPCG, is directly
purchasing/importing supplies on which the benefit of reduced/Nil incidence
of tax under the specified notifications has been availed. In this case, the
restriction under rule 96(10) of the CGST Rules is applicable to X. However, if
X supplies the said goods, after importation, to a domestic buyer (Y), on
payment of full tax, then Y can rightfully export these goods under payment
of integrated tax and claim refund of the integrated tax so paid. However, in
the said example if Y purchases these goods from X after availing the benefit
of specified notifications, then Y also will not be eligible to claim refund of
integrated tax paid on export of goods or services.
5.2
Overall, it is clarified that the restriction under rule 96(10) of the CGST
Rules, as amended retrospectively by notification No. 39/2018-Central Tax,
dated 04.09.2018, applies only to those purchasers/importers who are directly
purchasing/importing supplies on which the benefit of certain notifications, as
specified in the said sub-rule, has been availed.
6
Disbursal of refund amount after sanctioning by the proper officer:
6.1
A few cases have come to notice where a tax authority, after receiving a
sanction order from the counterpart tax authority (Centre or State), has
refused to disburse the relevant sanctioned amount calling into question the
validity of the sanction order on certain grounds. E.g. a tax officer of one
administration has sanctioned, on a provisional basis, 90 per cent. of the
amount claimed in a refund application for unutilized ITC on account of
exports. On receipt of the provisional sanction order, the tax officer of the
counterpart administration has observed that the provisional refund of input
tax credit has been incorrectly sanctioned for ineligible input tax credit and
has therefore, refused to disburse the tax amount pertaining to the same.
6.2
It is clarified that the remedy for correction of an incorrect or erroneous
sanction order lies in filing an appeal against such order and not in
withholding of the disbursement of the sanctioned amount. If any discrepancy is
noticed by the disbursing authority, the same should be brought to the notice
of the counterpart refund sanctioning authority, the concerned counterpart
reviewing authority and the nodal officer, but the disbursal of the refund
should not be withheld. It is hereby clarified that neither the State nor the
Central tax authorities shall refuse to disburse the amount sanctioned by the counterpart
tax authority on any grounds whatsoever, except under sub-section (11) of
section 54 of the CGST Act. It is further clarified that any adjustment of the
amount sanctioned as refund against any outstanding demand against the claimant
can be carried out by the refund disbursing authority if not already done by
the refund sanctioning authority.
7
Status of refund claim after issuance of deficiency memo:
7.1
Rule 90(3) of the CGST Rules provides that where any deficiencies in the
application for refund are noticed, the proper officer shall communicate the
deficiencies to the claimant in FORM GST RFD-03, requiring him to file a
fresh refund application after rectification of such deficiencies. Further,
rule 93(1) of the CGST Rules provides that where any deficiencies have been
communicated under rule 90(3), the amount debited under rule 89 (3) shall be
re- credited to the electronic credit ledger. Therefore, the intent of the law
is very clear that in case a deficiency memo in FORM GST RFD-03 has been
issued, the refund claim will have to be filed afresh.
7.2
It has been learnt that certain field formations are issuing show cause notices
to the claimants in cases where the refund application is not re-submitted
after the issuance of a deficiency memo. These show-cause-notices are being
subsequently adjudicated and orders are being passed in FORM GST RFD-04/06.
It is clarified that show-cause-notices are not required to be issued where
deficiency memos have been issued. A refund application which is re-submitted
after the issuance of a deficiency memo shall have to be treated as a fresh
application. No order in FORM GST RFD-04/06 can be issued in respect of
an application against which a deficiency memo has been issued and which has
not been resubmitted subsequently.
8 Treatment of refund applications where
the amount claimed is less than rupees one thousand:
8.1
Sub-section (14) of section 54 of the CGST Act provides that no refund under
sub- section (5) or sub-section (6) of section 54 shall be paid to an
applicant, if the amount is less than one thousand rupees.
8.2
In this regard, it is clarified that the limit of rupees one thousand shall be
applied for each tax head separately and not cumulatively. The limit would not
apply in cases of refund of excess balance in the electronic cash ledger. All
field formations are requested to reject claims of refund from the electronic
credit ledger for less than one thousand rupees and re- credit such amount by
issuing an order in FORM GST RFD-01B.
9
It is requested that suitable trade notices may be issued to publicize the
contents of this Circular.
10
Difficulty, if any, in implementation of this Circular may please be brought to
the notice of the Board.
F. No. 349/21/2016-GST
[Encl: Annexure-A]
(Circular No. 59/33/2018-GST)
Annexure-A
Format for Statement of Invoices to be submitted
with application for refund in FORM GST
RFD-01A
|
S. No. |
GSTIN of the supplier |
Name of the Supplier |
Invoice Details |
Type |
Central tax |
State tax/Union Territory tax |
Integrated tax |
Cess |
Eligible for ITC |
Amount of eligible ITC |
||
|
|
|
|
Invoice No. |
Date |
Value |
Inputs/ input services/ capital goods |
|
|
|
|
Yes/No / Partially |
|
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
13 |
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