Revised definition of “Turnover of Zero-rated supply of goods” -ITC refund, Goods and Services Tax - GST

[Narendra Soni]

Dear Experts

In case of ITC refund, refund is based on formula in which Zero rated turnover is required.Formula is (Net ITC*Zero-rated turnover/Total adjusted Turnover)

On 23.03.20, The CBIC vide Notification No.16/2020-Central Tax, has amended clause (c) of Rule 89 (4) which provides definition of “Turnover of Zero-rated supply of goods” and the amended definition is as under:

“(C) “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.”

Sir,

Vide this amendment, export value will be lower of actual export value and 1.5 times of domestic sale value.

It seen complicate definition,please suggest

1.What's meaning of" like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier,"

2.Whether this definition is applicable for refund pending to file for tax period before March 2020, OR will be effective for refund of tax period March 20.i.e.from which tax period the notification is applicable.

3.We export 4 types of products, whether 1.5 times of domestic sale will be calculated for product wise or for total taxable value of domestic sale and how to compare it with export sale product wise or total export sale.

4.How it will be calculate.

We are to apply ITC refund application for tax period for the month of Jan 2020 hence please provide expert advice at the earliest.

Posts / Replies

[Atul Rathod]

The amendment definition wouild be applicable for refund claimed filed after the date of notification. However even refund claimed filed for previous period but after the notification date shall be bounded by this amendment definition.

Further the said 1.5 times will be calculated prodcut wise and and with the equivalent quantity. Yes the provision is not clear. For ex if you have sold the 100 quantity in domestically for 10000 and exported 500 quantity for 100000 than while considering the zero rated turnover would be taken as =500*15 (i.e. 10*1.5)=75000 in my view.

Like goods means the same goods you have sold domestically or by any other supplier. though the price would be seen from the domestic transactions happend comaparitevely i.e. quantity nearest to the exported quantity.

[Narendra Soni]

Thanks Mr.Atul.

Dear Kasturi Sir, Ganeshan Sir, Mariappan Sir, Rajgopalan Sir, Mukand Sir and Yagay & Sun,and all other experts.

All are requested to please provide your expert views so that we can come on conclusion.

Thanks in Advance.

[SHARAD ANADA]

The definition of “Turnover of zero-rated supply of goods" under Rule 89(4) has been amended vide Notification No. 16/2020 – Central Tax dated 23.03.2020 to the effect that it shall be the actual transaction value of zero rated supplies made under LUT 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. Therefore in a nutshell if the actual export value is let us say INR 160 but the value of the like goods domestically supplied by the same or similarly placed supplier is let us say INR 100, the value of exports for calculating the eligible refund amount of the accumulated ITC shall be INR 150 and not the actual export value of INR 160. It is also important to note that the domestic value of goods has to be declared by the supplier who is seeking the refund. It therefore remains to be seen whether the said declaration shall be accepted, or refunds will be delayed for the want of any other information at the end of
the department

[GB Rao]

Dear Querist,

As of now, the views expressed by the experts appears to be correct unless any contrary explanation coming from the Department. So far nothing has come out.

[Rajagopalan Ranganathan]

Sir,

According to amending Notification 16/2020-Central Tax dated 23.03.2020 “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. Therefore if the actual export is more and deemed export, that is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier is less then you refund claim will be restricted accordingly. But we are not aware of the basis on which this amendment has been brought. May be to check filing of fraudulent claims filed by unscrupulous people. But if the actual export is more and refund claimed is also more than the refund calculated on the value of deemed export, that is,1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, then it will lead to litigation challenging the vires of this provision. In my opinion instead of the words "which ever is less", the words "whichever is higher" should be used. Even in this case Government will loose revenue since if 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier is more then value of actual export then claim based on deemed export value is to be granted. Therefore in my opinion this amendment is to be revisited by the Government..