TMI BlogRefundsX X X X Extracts X X X X X X X X Extracts X X X X ..... re from India (not yet operationalized) 13. Refund on account of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued (tax paid on advance payment) 14. Refund of CGST SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa. 15. Refudn to CSD Canteens. The list is only indicative and not exhaustive. Q 2. Whether Provisional Refund is allowable for all refunds under GST? Ans. No. Section 54(6) of CGST Act provides for grant of provisional refund of 90% of the total refund claim, in case the claim relates to refund arising on account of zero rated supplies. Thus only refund claims where refund arises on account of zero rated supply will be entitled to provisional refund. Q 3. Which supplies would be considered as zero rated? Ans. In terms of Section 16(1) of IGST Act , following supplies are considered as zero rated (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. Q 4. The GST Law allows exports to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here can be only one deficiency memo for one refund application and once such a memo has been issued, the applicant is required to file a fresh refund application, manually in FORM GST RFD-01A . Once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with respect to the application for the same period, unless the deficiencies pointed out in the original memo remain unrectified, either wholly or partly, or any other substantive deficiency is noticed subsequently (Para 6.1 of CBIC Circular no. 37/11/2018-GST dated 15.03.2018 ) Q 9. How can fresh claims be filed pursuant to issuance of deficiency memo? Ans. This fresh application has to be accompanied with the original ARN, debit entry number generated originally and a hard copy of the refund application filed online earlier. Q 10. What would happen if exports have been made without submitting any Bond/LUT. Will refund be denied on account of such exports? Ans. No. Substantive benefits of zero rating will not be denied where it has been established that exports in terms of the relevant provisions have been made. The delay in furnishin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 23.10.2017 ) and paying tax @ 0.1%, he can claim refund of unutilised ITC on account of inverted duty structure. Q 15. If such supplies are not zero rated, will it mean that the supplier will not be entitled to any refund on such supplies? Ans. No. The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure as per the provisions of clause (ii) of the first proviso to subsection (3) of section 54 of the CGST Act . Q 16. What is meant by the terms relevant period in so far as refund claims under GST are concerned. Is it different from tax period defined under the law? Ans. Section 2(107) of the CGST Act defines the term tax period as the period for which the return is required to be furnished. The terms Net ITC and turnover of zero rated supply of goods/services are used in the context of the relevant period in rule 89(4) of CGST Rules . The phrase relevant period has been defined in the said sub-rule as the period for which the claim has been filed . Thus, it can be seen that the two terms have different connotations under the law. Q 17. Is refund linked to a tax period or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces is fifteen days after the expiry of one year or such further period as may be allowed by the Commissioner from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India . (The underlined portion has been inserted vide CGST (Amendment) Act, 2018 and shall not into force once the same is notified). Q 23. What are the circumstances in which manual filing of refund claims is permitted under GST? Ans. Manual filing of refund claims is permitted, vide circular no.17/17/2017-GST dated 15th November 2017 and circular no.24/24/2017 dated 24th November 2017 and circular no.36/10/2018-GST dated 13th March 2018 , if the claim is on account of following (i) refund of unutilized input tax credit on account of zero rated supplies (ii) refund of unutilized input tax credit where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies) of goods or services or both except those supplies which are notified by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of provisionally accepted input tax credit at this juncture. However, the registered persons applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of sections 42 of the CGST Act have not been complied with in respect of the amount refunded. Q 28. What is the format in which the undertaking referred to above needs to be filed? Ans. The undertaking should be submitted manually along with the refund claim and the same is available in FORM RFD-01A on the common portal. Q 29. What will happen if the refund claim of unutilised ITC is rejected? Ans. Where any amount claimed as refund is rejected under rule 92 of the CGST Rules , either fully or partly, the amount debited, to the extent of rejection, shall be recredited to the electronic credit ledger by an order made in FORM GST RFD-1B until the FORM GST PMT-03 is available on the common portal. (Para 4 of circular no. 59/33/2018-GST dated 04th September, 2018 refers). Q 30. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C is allowed under GST? Ans. Refund of accumulated ITC is allowed only when the credit accumulation is on account of zero rated supply or on account of inverted rate structure. Q 34. What are the situations in which refund of accumulated ITC will not be allowed even if it s a case of zero rated supplies or inverted rate structure? Ans. Refund of ITC will not be allowed where the goods exported out of India are subject to export duty or where the supplier claims refund of IGST paid on such supplies. The Government also has the power to notify supplies where refund of ITC will not be admissible even if such credit accumulation is on account of an inverted duty structure. Q 35. Has the Government exercised its powers to curtail refund of ITC in respect of any product/services ? Ans. Yes. The government has issued notification no.15/2017-Central Tax (Rate) dated 28th June 2017 wherein it has been notified that no refund of unutilised input tax credit shall be allowed under section 54(3) of the CGST Act , in case of supply of services specified in sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act . The supplies specified under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment vide Circular No.18/18/2017-GST dated 16.11.2017 , that the aforesaid notification having been issued under clause (ii) of the proviso to Section 54(3) of the CGST Act , 2017, restriction on refund of unutilised input tax credit of GST paid on inputs will not be applicable to zero rated supplies, that is (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone Developer of special Economic Zone Unit. Q 37. How will the refund amount be calculated in case of claim of unutilised ITC on account of zero rated supplies? Ans. The refund will be calculated based on the formula Refund Amount = (turnover of zero rated supply of goods + turnover of zero rated supply of services ) x Net ITC /Adjusted total turnover. Q 38. How will the refund amount be calculated in case of claim of unutilised ITC on account of inverted rate structure? Ans. In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula - Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC Adjusted Total Turnover} - tax payable on such inverted ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id on export of goods, will the applicant need to file GST RFD-01/01A? Ans. No. As per rule 96 of the CGST Rules, 2017 , the shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India. Q 44. Will such refund claims be treated as having been filed when the shipping bill is filed? Ans. No. Such application shall be deemed to have been filed only when: - (a) the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export; and (b) the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B , as the case may be. Q 45. Who will process/disburse refund of IGST paid on export of goods? Ans. As per Rule 96 , the refund of IGST paid on export of goods is processed and disbursed by Customs. Q 46. What are the validations required for processing refund claim of IGST on export of goods? Ans. For processing such refund, GST system transmits invoice level data of Table 6A in GSTR 1 subject to the following validations: - 1. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 (5) to any applicant is not refunded within sixty days from the date of receipt of application under section 54(1) , interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax. Where any claim of refund arises from an order passed by an adjudicating authority or Appellate Authority or Appellate Tribunal or court which has attained finality and the same is not refunded within sixty days from the date of receipt of application filed consequent to such order, interest at such rate not exceeding nine per cent. as may be notified by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application till the date of refund. Where the claim relates to refund of pre-deposit made as per Section 107 or 112 of the GST Act , different provisions will apply for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of receipt of application and the acknowledgement will also show the date of receipt. The period of 60 days starts from such date of receipt and not from the date when acknowledgement is given which can be any date within 15 days from the date of receipt of application. Q 53. What is the relevant date within which claim for refund is to be filed? Ans. A claim for refund is to be filed within 2 years of a relevant date. Relevant date is different for different scenarios which is as under: (a) in the case of goods exported out of India where a refund of tax paid is available in respect of the goods themselves or, as the case may be, the inputs or input services used in such goods, - (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or (ii) if the goods are exported by land, the date on which such goods pass the frontier, or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received from supporting manufacturer/supplies received under advance/EPCG authorization etc)? Ans. No. It is to be noted that Rule 96(10) has been inserted, w.e.f 23.10.2017, in CGST Rules, 2017 vide Notification no. 75/2017-Central Tax dated 29.12.2017 (this was last amended vide notification No. 54/2018-Central tax dated 09.10.2018 ) so as to provide that the refund of integrated tax paid on export of goods or services is not permitted to such persons who have received supplies on which the supplier has availed the benefit of Notification no. 48/2017-Central Tax dated 18.10.2017 (supplies regarded as deemed exports) or Notification no. 40/2017- Central Tax (Rate) dated 23.10.2017 (supplies to merchant exporters at concessional rate of CGST+SGST) or notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017 . (supplies to merchant exporters at concessional rate of IGST). Thus, in respect of deemed export supplies/merchant exports, the option given under section 16(3) of IGST Act, 2017 , (of either paying tax and claiming refund of IGST or exporting under Bond and claiming refund of ITC), gets restricted and the zero-rated supplier can only avail of refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the applicant mentioned in his registration particulars and as specified in the application for refund. Q 61. Will provisional refund be granted separately under each head or will it be combined? Ans. Provisional refund shall be granted separately for each head Central Tax/State Tax/UT Tax/Integrated Tax/Cess within 7 days of acknowledgement in Form GST RFD-04 . Central /Integrated Tax/Cess would be paid by the Centre Tax Authorities and State Tax/UT tax would be disbursed by the State/UT Tax Authorities. Q 62. How will the proper officer satisfy the requirement of condition that the applicant has not been prosecuted for any offence under the Act? Ans. Based on declaration of applicant. Before sanction of the refund a declaration shall be obtained that the applicant has not contravened Rule 91(1) (condition that the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees). Q 63. How will claims be processed finally after sanctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nctioned refund amount shall be made only by the respective tax authority of the Centre or State Government. The payment of the sanctioned refund amount in relation to Central Tax/ Integrated Tax/ /Cess shall be made by the Central Tax authority while payment of the sanctioned refund amount in relation to ST/UT would be made by the State Tax/UT tax authority. Q 66. How will communication between Central and State tax authorities take place? Ans. The refund order issued either by the Central Tax authority or the State Tax/UT Tax authority shall be communicated to the concerned counterpart tax authority within seven days for the purpose of payment of the relevant sanctioned refund amount of tax or cess as the case may be. In order to facilitate sanction of refund amount of central tax and State tax by the respective tax authorities, it has been decided that both the Central and State Tax authority shall nominate nodal officer(s) for the purpose of liasioning through a dedicated e-mail id. Where the amount of central tax and State tax refund is ordered to be sanctioned provisionally/ finally by the Central tax authority and a sanction order is passed in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a statement containing the number and date of invoices, the evidence regarding the endorsement specified in the second proviso to sub-rule (1) and the details of payment, along with the proof thereof, made by the recipient to the supplier for authorised operations as defined under the Special Economic Zone Act, 2005 , in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer; 3. a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special Economic Zone unit or a Special Economic Zone developer. Q 70. Whether the DTA supplier would be entitled to provisional refund? Ans. As per Section 54(6) of the CGST Act , the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uments to be filed along with the claim of refund on account of deemed exports, if the claim is to be filed by the recipient? Ans. In case the refund is filed by the recipient of deemed export supplies, an undertaking by the supplier of deemed export supplies that he shall not claim the refund in respect of such supplies is also required to be furnished manually. The procedure regarding procurement of supplies of goods from DTA by Export Oriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / Software Technology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export as laid down in Circular No. 14/14/2017-GST dated 06.11.2017 needs to be complied with. Q 74. What will be the eligible amounts for refund in case of deemed exports? Ans. While filing RFD-01A (recipient of deemed exports), taxpayers need to enter the amount that they want to get as refund. The lowest of the following three categories are eligible for refund. 1. Balance in the Electronic Credit Ledger 2. ITC availed for the particular tax period 3. Amount entered by taxpayer in refund claim matrix. Q 75. In case the supplier claims refund on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments contained in the Form-B are mandatory, the recipient units will be free to add or continue with any additional data fields, as per their commercial requirements. All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or removed from the said unit. The digital records should be kept updated, accurate, complete and available at the said unit at all times for verification by the proper officer, whenever required. A digital copy of Form B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month (by the 10th of month) in a CD or Pen drive, as convenient to the said unit. 3. The above procedure and safeguards are in addition to the terms and conditions to be adhered to by a EOU / EHTP / STP / BTP unit in terms of the Foreign Trade Policy, 201520 and the duty exemption notification being availed by such unit. Q 77. What is the relevant date for filing of refund claim in case of deemed exports? Ans. The relevant date is the date of on which return relating to such deemed exports is furnished. The claim needs to be filed within 2 years from this date. Q 78 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndorsed tax invoice and the acknowledgment of the warehouse operator shall be provided to the registered supplier as well as to the jurisdictional tax officer of such supplier; and (ix) when goods have been exported, the registered recipient shall provide copy of shipping bill or bill of export containing details of Goods and Services Tax Identification Number (GSTIN) and tax invoice of the registered supplier along with proof of export general manifest or export report having been filed to the registered supplier as well as jurisdictional tax officer of such supplier. Q 79. What happens if the merchant exporter fails to export such goods? Ans. The registered supplier shall not be eligible for the exemption (i.e. supply at concessional rate) if the registered recipient fails to export the said goods within a period of ninety days from the date of issue of tax invoice. Q 80. Can the merchant exporter claim refund of ITC in respect of supplies received at concessional rate in terms of notification 40/2017-Central Tax (Rate) dated 23.10.2017. What about other inputs/input services which have gone into the subject export but which have not been procured under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Q 82. Is the scheme of making supplies to merchant exporters at concessional rate of duty in terms of notification 40/2017-Central Tax (Rate) dated 23.10.2017 compulsory? Ans. No. The benefit of supplies at concessional rate is subject to certain conditions and the said scheme is optional. The option may or may not be availed by the supplier and / or the recipient and the goods may be procured at the normal applicable tax rate. Q 83. Can the merchant exporter export goods (in respect of which concessional rate of duty is availed by the supplier) on payment of IGST and claim refund of IGST? Ans. No. The exporter of such goods can export the goods only under LUT / bond and cannot export on payment of integrated tax. In this connection, Rule 96(10) of the CGST Rules as amended from time to time may be referred. Q 84. Will refund of Compensation Cess be also admissible under GST? Ans. Yes. Circular No.1/1/2017-Compensation Cess issued by Board clarifies that provisions of section 16 of the IGST Act, 2017 , relating to zero rated supply will apply mutatis mutandis for the purpose of Compensation Cess (wherever applicable), that is to say that: a) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t date, within which he has to file a claim for refund of IGST wrongly paid? Ans. Section 77 of CGST Act, 2017 , read with Section 19 of IGST Act , are the enabling provisions for grant of refund in such cases. These provisions use the words ..shall be granted refund of the amount of Central/integrated tax so paid in such manner and subject to such conditions as may be prescribed . Thus, refunds will have to be mandatorily granted. The stipulation in Section 54(1) that claims will have to be filed within 2 years from the relevant date, will not apply for a claim under this category. Q 88. Interest on delayed payment (if refund is not paid within 60 days from the date of receipt of application) will be paid right from the first date of receipt of claim till the date of payment. Is this statement true? Ans. As per section 56 of CGST Act, 2017, If any tax ordered to be refunded under section 54(5) to any applicant is not refunded within sixty days from the date of receipt of application under section 54(1) , interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of refund of tax paid during the course of proceedings which the Courts have held as not payable on merits, interest liability would arise under Section 56 of the CGST Act . i.e interest would be payable if the amount has not been refunded within 60 days of filing of application for refund by the claimant. That is to say, after the judgment or decree holding the tax to be not payable, the appellant will have to file a claim a claim under Section 54(1) and thereafter if the amount is not refunded within 60 days of filing of application, interest liability will arise for Revenue. The position would be different in case of refund of pre-deposit. For refund of amounts paid as pre-deposit (in terms of Section 107(6) 112 (8) ) interest liability will arise in terms of Section 115 of the CGST Act . As per Section 115 of CGST Act , where an amount paid by the appellant under sub-section (6) of section 107 or sub-section (8) of section 112 is required to be refunded consequent to any order of the Appellate Authority or of the Appellate Tribunal, interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with 54(8) of the CGST Act, 2017 . Every claim of refund sanctioned will be credited to the Consumer Welfare Fund in terms of section 54(5) of CGST Act, 2017 . It will, instead of being credited to the fund, be paid to the claimant in situations mentioned in Section 54(8) . Thus, the principle will not apply to refund claims arising on account of zero rated supply, refund of accumulated ITC on account of zero rated supply and inverted rate structure, where wrong tax is paid (IGST instead of C+SGST vice versa), where tax has been paid on advances but no supply is made and no invoice has been issued. These are cases where the principle of unjust enrichment is not applicable and the proper officer need not satisfy himself whether the incidence of tax has been passed on to any other person in such cases. In all other cases, refund will be sanctioned to the claimant only if the claimant demonstrates that the incidence of tax has not been passed on to any other person. Q 96. What is the standard of proof required under GST to demonstrate non-passing of incidence of tax to any other person? Ans. Rule 89(2) (l) (m) deals with documentary evidence pertaining to passing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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