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GIST OF CIRCULARS ISSUED ON 03.10.2019

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GIST OF CIRCULARS ISSUED ON 03.10.2019
By: Mr.M. GOVINDARAJAN
October 12, 2019
All Articles by: Mr.M. GOVINDARAJAN       View Profile
  • Contents

Recent circulars

The Board issued 3 circulars on 03.10.2019 as detailed below-

Circular No. 110/29/2019

In case of refund of tax by a registered person, for whatsoever reason, he has to file an application to claim the refund in FORM GST RFD-01A/RFD-01 under a category for a particular period on the common portal.  The system pops up a message box asking whether he wants to apply for ‘NIL’ refund for the selected period.   This procedure is to ensure that all refund applications under a particular category are filed chronologically.   But some persons inadvertently selected the NIL refund.  Once a ‘NIL’ refund claim has been filed for a period under a particular category, the common portal does not allow the registered person to re-file the refund claim for that period under the said category.

The registered persons, who inadvertently opted for the NIL refund made representations to the Board about their sufferings due to giving option for the NIL refund despite there is a genuine claim of refund.  Several representations have been received by the Board from such registered persons requesting that they may be allowed to re-file the refund claim for the period and the category under which the NIL claims has inadvertently been filed.  This matter has been examined by the Board.  In order to clarify this issue and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017, issued this circular.

The Board clarified that a registered person who has filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a given period under a particular category, may again apply for refund for the said period under the same category only if he satisfies the following two conditions:

  • The registered person must have filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a certain period under a particular category; and
  • No refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.

The second condition shall apply only for refund claims falling under the following categories:

  • Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
  • Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
  • Refund of unutilized ITC on account of accumulation due to inverted tax structure;

In all other cases, registered persons shall be allowed to re-apply even if the second condition  is not satisfied.

It is clarified by the Board the registered persons satisfying the above conditions may file the refund claim under “Any Other” category instead of the category under which the NIL refund claim has already been filed. However, the refund claim should pertain to the same period for which the NIL application was filed. The application under the “Any Other” category shall also be accompanied by all the supporting documents which would be required to be otherwise submitted with the refund claim.  On receipt of the claim, the proper officer shall calculate the admissible refund amount.  Further, upon scrutiny of the application for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable as refund, he shall request the taxpayer in writing, if required, to debit the said amount from his 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.

Circular No.111/30/2019-GST

The Board gives clarifications on the doubts on the procedure to be followed by a registered person to claim refund subsequent to a favorable order in appeal or any other forum against rejection of a refund claim in Form GST RFD-06.    The Board examined the views and issued this circular making clarification on this subject.  Vide this clarification the Board prescribed the following procedure-

  • Appeals against rejection of refund claims are being disposed offline as the electronic module for the same is yet to be made operational
  • Where an appeal is filed against the rejection of a refund claim, re-crediting of the amount debited from the electronic credit ledger, if any, is not done till the appeal is finally rejected. 
  • Therefore, such rejected amount remains debited in respect of the particular refund claim filed in Form GST RFD-01.
  • In case a favorable order is received by a registered person in appeal or in any other forum in respect of a refund claim rejected through issuance of an order in Form GST RFD-06, the registered person would file a fresh refund application under the category “Refund on account of assessment/provisional assessment/appeal/any other order” claiming refund of the amount allowed in appeal or any other forum. 
  •  Since the amount debited, if any, at the time of filing of the refund application was not re-credited, the registered person shall not be required to debit the said amount again from his electronic credit ledger at the time of filing of the fresh refund application under the category “Refund on account of assessment/provisional assessment/appeal/any other order”.
  • The registered person shall be required to give details of the type of the Order (appeal/any other order), Order No., Order date and the Order Issuing Authority. 
  • He would also be required to upload a copy of the order of the Appellate or other authority, copy of the refund rejection order in Form GST RFD 06 issued by the proper officer or such other order against which appeal has been preferred and other related documents.
  • On receipt of the application for refund under the category “Refund on account of assessment/provisional assessment/appeal/any other order” the proper officer would sanction the amount of refund as allowed in appeal or in subsequent forum which was originally rejected and shall make an order in Form GST RFD 06 and issue payment order in Form GST RFD 05 accordingly.
  • The proper officer disposing the application for refund under the category “Refund on account of assessment/provisional assessment/appeal/any other order” shall also ensure re-credit of any amount which remains rejected in the order of the appellate (or any other authority).
  •  However, such re-credit shall be made following the guideline as laid down in para 4.2 of Circular no. 59/33/2018 – GST dated 04/09/2018, which provides that 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.

The Board also gave an illustration in this regard as detailed below-

  • Consider a registered person who makes an application for refund of unutilized ITC on account of export to the extent of ₹ 100/- and debits the said amount from his electronic credit ledger. 
  • The proper officer disposes the application by allowing refund of ₹ 70/- and rejecting the refund of ₹ 30/-.
  • However, he does not re-credit Rs.30/- since appeal is preferred by the claimant and accordingly Form GST RFD 01B is not uploaded.
  • Assume that the appellate authority allows refund of only ₹ 10/- out of the ₹ 30/- for which the registered person went in appeal. 
  • This ₹ 10/- shall be claimed afresh under the category “Refund on account of assessment/provisional assessment/appeal/any other order” and processed accordingly.
  • However, subsequent to processing of this claim of ₹ 10/- the proper officer shall re-credit ₹ 20/- to the electronic credit ledger of the claimant, provided that the registered person is not challenging the order in a higher forum.
  • For this purpose, Form GST RFD 01B under the original ARN which has so far not been uploaded will be uploaded with refund sanctioned amount as ₹ 80/- and the amount to be re-credited as ₹ 20/-.
  •  In case, the proper officer who rejected the refund claim is not the one who is disposing the application under the category “Refund on account of assessment/provisional assessment/appeal/any other order”, the latter shall communicate to the proper officer who rejected the refund claim to close the ARN as above only after obtaining the undertaking as referred in para 4.2 of Circular no. 59/33/2018 – GST dated 04/09/2018.

Circular No. 112/31/2019-GST

Vide circular No. 105/24/2019-GST, dated 28.06.2019 the Board issued the following clarifications on various doubts related to treatment of secondary discounts or post-sales discounts under GST-

  •  If the post-sale discount is given by the supplier of goods to the dealer without any further obligation or action required at the dealer’s end, then the post sales discount given by the said supplier will be related to the original supply of goods and it would not be included in the value of supply, in the hands of supplier of goods, subject to the fulfillment of provisions of section 15 (3) of the Act.  However, if the additional discount given by the supplier of goods to the dealer is the post-sale incentive requiring the dealer to do some act like undertaking special sales drive, advertisement campaign, exhibition etc., then such transaction would be a separate transaction and the additional discount will be the consideration for undertaking such activity and therefore would be in relation to supply of service by dealer to the supplier of goods. The dealer, being supplier of services, would be required to charge applicable GST on the value of such additional discount and the supplier of goods, being recipient of services, will be eligible to claim input tax credit of the GST so charged by the dealer.
  • If the additional discount is given by the supplier of goods to the dealer to offer a special reduced price by the dealer to the customer to augment the sales volume, then such additional discount would represent the consideration flowing from the supplier of goods to the dealer for the supply made by dealer to the customer. This additional discount as consideration, payable by any person (supplier of goods in this case) would be liable to be added to the consideration payable by the customer, for the purpose of arriving value of supply, in the hands of the dealer, under section 15 of the Act. The customer, if registered, would be eligible to claim ITC of the tax charged by the dealer only to the extent of the tax paid by the said customer to the dealer in view of second proviso to section 16(2) of the Act.

Numerous representations were received expressing apprehensions on the implications of the said Circular. In view of these apprehensions and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board , vide this circular, withdrew the circular No.105/24/2019-GST.

 

By: Mr.M. GOVINDARAJAN - October 12, 2019

 

Discussions to this article

 

There was numerous representations on the circular regarding secondary discount. The provision was difficult to be implemented and therefore it is rescinded. Thanks Sri Mariappan Sir for this brief article.

By: Ganeshan Kalyani
Dated: 13/10/2019

 

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