TMI BlogProcessing of final refund under the GST.X X X X Extracts X X X X X X X X Extracts X X X X ..... of Indirect Taxes and Customs (CBIC) had also issued the Circulars on the captioned subject matter. 1.2. Since issuance of aforesaid Circular(s), it has brought to the notice of this office that in many cases, during the verification of the claim of refund either provisionally or, as the case may be, the final refund, there are instances where the tax payer, has either erroneously claimed the refund of accumulated credit, or of the IGST paid in case of exports. It has also been reported that in certain cases the refund is claimed in respect of input tax credit that is inadmissible under the GST law or where there is mis-match or un-match of the input tax credit availed by the recipient and that passed on by the supplier. It is further reported that due like reasons, Nodal Officer(s) have denied the refund either partly or fully. Therefore, under such circumstances, the Nodal Officers have rejected the refund so claimed. 1.3. On this background, refund claimed or granted erroneously necessitates the initiation of proceedings for Demand and Recovery under appropriate provisions of GST law. 1.4. For aforesaid reasons an Internal Circular 19A of 2018 dated the 18th July 2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r required), GSTR-3B, GSTR-1 , tax invoices and autodrafted invoice level inward supplies details in FROM-GSTR-2A are vital and primary documents that facilitates determination of the eligible amount of refund under SGST Act/CGST Act/IGST Act/Cess Act. 1.2. Among aforesaid documents, the applicant is required to submit along with refund application in FORM-GST-RFD-01A with requisite declarations and undertakings, the tax invoices, Statement in Proforma (in Excel) attached to Internal Circular 19A of 2018 dated 18th July 2018 and soft copy of latest GSTR-2A consisting details of supplies made for the month for which refund application is filed. 1.3. In case, the supplier has carried out the amendments, to the invoices uploaded with return in FORM-GSTR-1, in the subsequent return period or has added certain missed invoices in the subsequent month GSTR-1 return, it becomes necessary to provide all such information i.e. auto-drafted GSTR-2A in order to cross-verify the ITC availed by the refund applicant and that passed on by the supplier. 1.4. There would be situations where the refund applicant is filing return in GSTR-1 with monthly periodicity, whereas the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are received in the lots then the recipient shall be entitled to take ITC upon receipt of last lot or instalment. (6) in case the tax payer has failed to pay to the supplier of goods or services both (except the supplies where tax is payable on reverse charge basis), the amount towards the value pf supply along with tax payable thereon within a period of 180 days from the date of issue of invoice by the supplier then such input tax credit may be taken once said outstanding payment is made to the supplier. (7) In case, the registered person has claimed depreciation in respect of the tax component of the cost of the capital goods and plant and machinery, as per the Income Tax Act, 1961, then the ITC in respect of said component of tax shall not be allowed. So as to ascertain this, the Nodal Officer need to raise specific query to the tax payer and ask for the explanation in this behalf. The ITC claimed under this scenario is in-eligible/in-admissible. In other words, no refund is available in respect of such ITC; even in the cases where refund is claimed of IGST paid. (8) The registered person shall not be entitled to take ITC in respect of any invoice or the debit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) the restriction of fifty per cent. is not applicable to the tax paid on supplies made by one registered person to another registered person having the same Permanent Account Number. In other words, the restriction of 50% ITC in relation to inter-branch taxable supply is not applicable. Example. State Bank of India, Mazgaon Branch make the tax paid supply to State Bank of India, Delhi branch or one business vertical of SBI is making tax paid supply to another business vertical of SBI provided they are having the same PAN. The aforesaid restriction of 50% ITC is not applicable. (3) In addition to the aforesaid aspects, it may be noted that the registered taxable person shall not take credit of input tax in respect of the contingencies given in clause (A) to (I) below: - (A) motor vehicles and other conveyances except when they are used for making the following taxable supplies, - of such vehicles or conveyances; or of transportation of passengers; or for imparting training on driving, flying, navigating such vehicles or conveyances; (B) motor vehicles and other conveyances for transportation of goods; (C) the following supply of goods or services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re held (a) (b) (c) (d) (1) taxable person has applied for registration within the 30 days from the date on which he has become liable for registration. [Section 18(1)(a)] in respect of inputs held, - (i) in stock and (ii) inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act (2) Registration has been taken voluntarily [See section 25(3) of the MGST Act] provided that the Turn-over has not been exceeded the threshold limit on the date of registration. [Section 18(1)(b)] in respect of inputs held, - (i) in stock and (ii) inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of grant of registration. (3) Where registered person ceases to pay tax under section 10. [Section 18(1)(c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit, - (a) but subsequently opt to pay tax under Composition Scheme, or (b) where the goods or services or both supplied by him become wholly exempt. [Section 18(4)] shall pay an amount through debiting the electronic credit ledger equivalent to the credit of input tax held, - in stock and inputs contained in semi-finished or finished goods held in stock and on capital goods on the day immediately before the day on which option is exercised. the credit in respect of capital goods shall be reduced as given in rule 44(3) of the MGST Rules. it may be noted that any balance remaining in the electronic credit ledger after payment as aforesaid shall lapse. (3) (a) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken , (b) where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, [Section 18(6)] shall pay on transaction value as determined under section 15, an amount equal to the input tax credit taken on the said capital goods or plant and machinery t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax payer [i.e. recipient-refund applicant on the basis of which ITC is availed] which includes details of B2B invoices, credit/debit notes, Amendment to B2B invoices and Amendment to credit/debit notes, ISD Credit and Amendment to ISD credit etc.; 1.3. The Nodal Officer, may on SAP portal i.e. MAHAGST, raise a request as per the MANUAL available on the said portal. On accessing the GSTR-2A, as made available on the SAP portal, the Nodal Officer shall take appropriate care to examine the GSTR-2A of the relevant period including the GSTR-2A, the amendments made by the supplier in respect of the supplies made to refund applicant qua month for which the refund application is filed. 1.4. The return filing frequency of the supplier as also the amendments made to the subsequent months GSTR-1 and addition of missing invoices by the supplier shall also be taken into account while determining the match, un-match or mis-match in the input credit availed by the refund applicant and that is passed on by the supplier. Example : (a) Recipient M/s ABC has filed the refund application for ₹ 1,00,000/- for the month of December-2017 having monthly periodicity of filing GSTR-1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in following format: Sr. No. Country of Import Invoice No. Invoice Date Tax rate (%) Total Invoice Value Total Taxable Value IGST CESS 2. Verification of tax invoices for inward supply, details of GST paid on reverse charge mechanism and other relevant documents: 2.1. Scrutiny of refund application, ARN receipt, Statement under rule 89 and Tax invoice etc. (1) Upon receipt of the Refund Application in FORM-GST-RFD-01A, ARN receipt and relevant Statement depending upon the Nature of refund, the Nodal Officer shall verify the content of the refund application and enclosures and declarations or undertaking enclosed therewith. These aspects had already been explained in the earlier Circulars issued in this behalf. (2) Comparison of Turn-over shown in refund application in FORMGST-RFD-01A, GSTR-3B and GSTR-1 , any deviation in this respect shall be reconciled. Unless said deviation is reconciled properly refund shall no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2. Determination of eligible refund amount: (1) The supply on account of exports of goods without payment of IGST need to be verified from the ICEGATE portal. Whereas, exports of services with or without payment of IGST need to be verified and confirmed on the basis of the export/supply related documents including the Foreign inward remittance Certificate/Bank Reconciliation Certificate etc. The aspects of verification of outward supply i.e. the deemed exports, supplies having inverted tax structure including supplies made to merchant exporters with 0.05% SGST/CGST or 0.1% IGST had been elaborately explained in the Circular(s) issued from time to time, in this behalf. (2) In short, this Circular refers to the outward supply in the limited context of determination of the output liability or, as the case may be, confirming the nature of outward supply more particularly exports, inverted tax structure or the deemed exports. (3) On carrying out the verification as above, the eligible amount of refund need to be determined on the basis of the nature of refund viz. refund on account of IGST paid on export of services, refund of accumulated credit on account of export of goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in all such cases the balance 10% refund shall be given only after undertaking Audit as provided under section 65 of the MGST Act. (2) The Audit should be undertaken so as to verify the extent of the ITC that is admissible. The Nodal Officer shall also verify the match, mis-match or un-match of ITC with the claim made by the refund applicant and that is passed on by the supplier. (3) In case the ITC claim is prima-facie found to be in-admissible or there is mis-match or un-match, then in all such cases the balance refund of 10% or such percentage of refund out of balance 10% found un-match or mis-match need to be rejected. For this showcause in FORM-GST-RFD-08 need to issued. On receipt of reply in FORM-GST-RFD-09 which in case, in the opinion of the Nodal Officer is deficient in compliance, then such balance refund shall be rejected and refund rejection order in FORM-GST-RFD-06 shall be issued. (4) However, in the cases where the refund relating to the inverted duty structure, on account of supplies made to SEZ developer or unit or refund on account of deemed export is pending as on the date of issuance of this Trade Circular then is all such cases the refund shall be g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified. Notice for Audit may be given in respect of all the refund application for a financial year. 4.3. During the Audit proceedings the Nodal Officer shall seek all the documents based upon which the claim is made including the documents/tax invoices relating to the Input Tax Credit. 4.4. The Audit shall be completed within three months from the date of submission of the record by the tax payer. The Audit findings shall be communicated to the Tax payer. 4.5. In case the Tax payer accepts the Audit findings and make the payment of tax, interest as determined, through FORM-GST-DRC-03. In such case, the Audit proceedings shall be closed and the closure of the Audit proceedings shall be communicated to the said tax payer. 4.6. However, in the cases where the tax payer disputes the Audit findings and refuses to make the default good or fails to pay the amount as determined then is all such cases, as provided under section 65(7) of the MGST Act, the proceedings for demand and recovery shall be initiated as per the provisions of the section 73 or 74 of the MGST Act. 5. The issues that need to be considered while issuing the Show-cause Notice for Demand and recovery of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pported. (j) Personal hearing (k) Record of personal hearing: (l) Analysis of issues: (m) Body of the order: (n) Quantification of demand and issuance of Demand Notice in FORM-GST-DRC-07. (2) The show cause notice under section 73(1) or the section 74(1) shall be in FORM-GST-DRC 01. (3) The statement under 73(3) or the section 74(3), a summary thereof be issued in FORM-GST-DRC-02 , specifying the details of the amount payable (4) In case before the service of notice (i.e. FORM-GST-DRC-01 ) or statement ( FORM-GST-DRC-02 ) the person chargeable with tax discharges the liability voluntarily (Tax and Interest) in accordance with the provisions of section 73(5) or tax liability (tax, interest and penalty) in accordance with the provisions of section 74(5), the noticee shall intimate to the proper officer of such payment in FORM-GST-DRC-03 . The proper officer shall issue an acknowledgment in FORM-GST-DRC 04. (5) Where the taxpayer or person makes payment of tax and interest under section 73(8) of the MGST Act or, as the case may be, tax, interest and penalty equivalent to 25% as per section 74(8) of the MGST Act, within the 30 days from the service o ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
