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2019 (11) TMI 160 - AAR - GST


Issues Involved:

1. Applicability of Rule 96(10) of the CGST Rules on claiming refund of IGST paid on export of goods.
2. Whether the restriction applies only to exports of goods procured at a concessional rate under Notification No. 40/2017 - Central Tax (Rate).
3. Whether the restriction prohibits refund of IGST paid on exports where goods have been procured at full GST rate but some goods were procured at a concessional rate.
4. The period for which the restriction under Notification 3/2018 - Central Tax applies.

Issue-wise Detailed Analysis:

1. Applicability of Rule 96(10) of the CGST Rules on claiming refund of IGST paid on export of goods:

The applicant sought clarification on whether the restriction introduced by Notification No. 3/2018 - Central Tax (later substituted by Notification No. 39/2018 - Central Tax dated 04.09.2018 retrospectively from 23.10.2017) on claiming refund of IGST paid on export of goods applies only to such exports where the corresponding inward supplies were procured at a concessional rate of 0.10% GST under Notification No. 40/2017 - Central Tax (Rate). The ruling clarified that the restriction is on persons claiming refund of IGST paid if they have received supplies on which the benefit of Notification No. 40/2017 - Central Tax (Rate) has been availed. This restriction is not related to individual transactions but to the person as a whole.

2. Whether the restriction applies only to exports of goods procured at a concessional rate under Notification No. 40/2017 - Central Tax (Rate):

The applicant argued that the restriction should apply solely to the extent of those goods exported which were procured at a concessional rate of tax under Notification No. 40/2017 - Central Tax (Rate). The ruling clarified that if a person has utilized the benefit of the said notification on inward supplies, they would not be eligible for the scheme of paying IGST on the export of goods and claiming a refund of the entire amount of IGST paid on such goods being exported. However, this does not amount to a denial of refund of input tax credit, and the person can always avail the benefit of zero-rated supplies on the basis of LUT.

3. Whether the restriction prohibits refund of IGST paid on exports where goods have been procured at full GST rate but some goods were procured at a concessional rate:

The applicant proposed to export goods on payment of IGST which were procured without any concessions or exemptions and claim a refund of such IGST paid. Additionally, the applicant wished to procure some goods at a concessional rate of GST @ 0.10% and export such goods under LUT without payment of IGST. The ruling stated that the restriction on claiming a refund of IGST paid on export of goods introduced under sub-rule (10) of Rule 96 should apply solely to the extent of those goods exported which were procured at a concessional rate of tax under Notification No. 40/2017 - Central Tax (Rate). The applicant would be eligible for a refund of IGST paid on goods procured without exemption or concession.

4. The period for which the restriction under Notification 3/2018 - Central Tax applies:

The ruling clarified that sub-rule (10) of Rule 96 of the CGST Rules came into effect from 23.10.2017, which is also the date of effect of Notification No. 40/2017 - Central Tax (Rate) dated 23.10.2017. Hence, there is an alignment of the Merchant Export scheme and the refund of IGST paid on exports. The restriction applies from 23.10.2017 onwards.

Ruling:

The persons who have procured goods by utilizing the benefit of Notification No. 40/2017 - Central Tax (Rate) dated 23.10.2017 are not eligible to claim a refund of the IGST paid on exports as per Rule 96(10) of the CGST Rules 2017 right from 23.10.2017, irrespective of the other transactions made by such person.

 

 

 

 

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