Refund Claim
in Deficiency Memo Cases – No Re-credit in Ledger – Refund Application to be
Accepted under earlier Application Reference Number (ARN)
·
IGST Refund Allowed in EPCG Cases even
during the period 13 Oct 2017-9 Oct 2018
[Circular No.
70/44/2018 –GST dated 26 October 2018]
Subject: Clarification on certain issues related to refund.
The Board is in receipt of representations seeking clarification
on certain 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 the “CGST Act”), hereby
clarifies the issues as detailed hereunder:
2. Status of refund claim after issuance of deficiency
memo and re-credit of electronic credit ledger:
2.1 Para 7.1 of circular No. 59/33/2018-GST dated the 4th
September, 2018 clarifies the intent of law in cases where a deficiency memo is
issued in respect of a refund claim. In para 7.2 of the said circular, the practise
being followed in the field formations was elaborated and it was clarified that
show cause notices are not required to be issued (and consequently no orders are
required to be issued in FORM GST RFD-04/06) in cases where refund application
is not re- submitted after the issuance of a deficiency memo (in FORM GST RFD-03).
It was also clarified that once a deficiency memo has been issued against an application
for refund, the amount of Input Tax Credit debited under sub-rule (3) of rule 89
of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the
“CGST Rules”) is required to be re- credited to the electronic credit ledger of
the applicant by using FORM GST RFD-01B and the taxpayer is expected to file
a fresh application for refund.
2.2 The issue has been re-examined and it has been observed that
presently the common portal does not allow a taxpayer to file a fresh application
for refund once a deficiency memo has been issued against an earlier refund application
for the same period. Therefore, it is clarified that till the time such facility
is developed, taxpayers would be required to submit the rectified refund application
under the earlier Application Reference Number (ARN) only. Thus, it is reiterated
that when a deficiency memo in FORM GST RFD-03 is issued to taxpayers, re-credit
in the electronic credit ledger (using FORM GST RFD-01B) is not required
to be carried out and the rectified refund application would be accepted by the
jurisdictional tax authorities with the earlier ARN itself. It is further clarified
that a suitable clarification would be issued separately for cases in which such
re-credit has already been carried out.
3. Allowing exporters who have received capital goods under
EPCG to claim refund of IGST paid on exports:
3.1 Sub-rule (10) of Rule 96 of the Central Goods and Services
Tax Rules, 2017 (hereinafter referred to as “said sub-rule”), restricts exporters
from availing the facility of claiming refund of IGST paid on exports in certain
scenarios. It was intended that exporters availing benefit of certain notifications
would not be eligible to avail the facility of such refund. However, representations
have been received requesting that exporters who have received capital goods under
the Export Promotion Capital Goods Scheme (hereinafter referred to as “EPCG Scheme”),
should be allowed to avail the facility of claiming refund of the IGST paid on exports.
GST Council, in its 30th meeting held in New Delhi on 28th
September, 2018, had accorded approval to the proposal of suitably amending the
said sub-rule along with sub-rule (4B) of rule 89 of the CGST Rules prospectively
in order to enable such exporters to avail the said facility notification No. 54/2018
– Central Tax dated the 9th October, 2018 has been issued to carry out
the changes recommended by the GST Council. Alongside the amendment carried out
in the said sub-rule through the notification No. 39/2018- Central Tax dated 4th
September, 2018 has been rescinded vide notification No. 53/2018 – Central Tax dated
the 9th October, 2018.
3.2 For removal of doubts, it is clarified that the net effect
of these changes would be that any exporter who himself/herself imported any inputs/capital
goods in terms of notification Nos. 78/2017-Customs and 79/2017-Customs both dated
13th October, 2017 shall be eligible to claim refund of the IGST paid
on exports till the date of the issuance of the notification No. 54/2018– Central
Tax dated the 9th October, 2018 referred to above.
3.3 Further, after the issuance of notification No. 54/2018 –
Central Tax dated the 9th October, 2018, exporters who are importing
goods in terms of notification Nos. 78/2017- Customs and 79/2017-Customs both dated
13th October, 2017 would not be eligible for refund of IGST paid on exports
as provided in the said sub-rule. However, exporters who are receiving capital goods
under the EPCG scheme, either through import in terms of notification No. 79/2017-Customs
dated 13th October, 2017 or through domestic procurement in terms of
notification No. 48/2017-Central Tax, dated 18th October, 2017, shall
continue to be eligible to claim refund of IGST paid on exports and would not be
hit by the restrictions provided in the said sub-rule. All clarifications issued
in this regard vide any Circular issued earlier are hereby superseded.
4. It is requested that suitable trade notices may be issued
to publicize the contents of this Circular.
5. Difficulty, if any, in implementation of this Circular may
please be brought to the notice of the Board.
F. No. CBEC/20/16/04/2017-GST