TMI BlogFully electronic refund process through FORM GST RFD-01 and single disbursement.X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments. Further processing of these refund applications, i.e. issuance of acknowledgement of the refund application, issuance of deficiency memo, passing of provisional/final order, payment advice etc. was also being done manually. In order to make the process of submission of the refund application electronic, Circular No. 79/53/2018-GST dated 31.12.2018 was issued wherein it was specified that the refund application in FORM GST RFD-01A , along with all supporting documents, shall be submitted electronically. However, various post submission stages of processing of the refund application continued to be manual. 2. The necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26.09.2019 . Accordingly, the Circulars issued earlier laying down the guidelines for manual submission and processing of refund claims need to be suitably modified and a fresh set of guidelines needs to be issued for electronic submission and processing of refund claims. With this objective and in order to ensure uniformity in the implementati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... categories mentioned above. This shall entail filing of statements/declarations/undertakings which are part of FORM GST RFD-01 itself, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim. A comprehensive list of such documents is provided at Annexure-A and it is clarified that no other document needs to be provided by the applicant at the stage of filing of the refund application. The facility of uploading these other documents/invoices shall be available on the common portal where four documents, each of maximum 5MB, may be uploaded along with the refund application. Neither the refund application in FORM GST RFD-01 nor any of the supporting documents shall be required to be physically submitted to the office of the jurisdictional proper officer. b. The Application Reference Number (ARN) will be generated only after the applicant has completed the process of filing the refund application in FORM GST RFD-01 , and has completed uploading of all the supporting documents/ undertaking/ statements/invoices and, where required, the amount has been debited from the electronic credit/cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if such an applicant gets assigned to one of the tax authorities after generation of the ARN and a deficiency memo gets issued for the refund application submitted by him, then the re-submitted refund application, after correction of deficiencies, shall be treated as a fresh refund application and shall be forwarded to the jurisdictional proper officer of the tax authority to which the taxpayer has now been assigned, irrespective of which authority handled the initial refund claim and issued the deficiency memo. 6. Any refund claim for a tax period may be filed only after furnishing all the returns in FORM GSTR-1 and FORM GSTR-3B which were due to be furnished on or before the date on which the refund application is being filed. However, in case of a claim for refund filed by a composition taxpayer, a non-resident taxable person, or an Input Service Distributor (ISD) furnishing of returns in FORM GSTR-1 and FORM GSTR-3B is not required. Instead, the applicant should have furnished returns in FORM GSTR-4 (along with FORM GST CMP-08 ), FORM GSTR-5 or FORM GSTR-6 , as the case may be, which were due to be furnished on or before the date on which the refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued within the aforesaid period of 15 days starting from the date of generation of ARN. Once an acknowledgement has been issued in relation to a refund application, no deficiency memo, on any grounds, may be subsequently issued for the said application. 10. After a deficiency memo has been issued, the refund application would not be further processed and a fresh application would have to be filed. Any amount of input tax credit/cash debited from electronic credit/ cash ledger would be re-credited automatically once the deficiency memo has been issued. It may be noted that the re-credit would take place automatically and no order in FORM GST PMT-03 is required to be issued. The applicant is required to rectify the deficiencies highlighted in deficiency memo and file fresh refund application electronically in FORM GST RFD-01 again for the same period and this application would have a new and distinct ARN. 11. It is further clarified that 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 orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90 as provisional refund through FORM GST RFD-04 and the same is electronically credited to his bank account. However, on detailed examination, it appears to the proper officer that only an amount of ₹ 70 is admissible as refund to the applicant. In such cases, the proper officer shall have to issue a show cause notice to the applicant, in FORM GST RFD-08 , under section 54 of the CGST Act , read with section 73 or 74 of the CGST Act , requiring the applicant to show cause as to why: a. the amount claimed of ₹ 30/- should not be rejected as per the relevant provisions of the law; and b. the amount of ₹ 20/- erroneously refunded should not be recovered under section 73 or 74 of the CGST Act , as the case may be, along with interest and penalty, if any. 16. The proper officer for adjudicating the above case shall be the same as the proper officer for sanctioning refund under section 54 of the CGST Act . The above notice shall be adjudicated following the principles of natural justice and an order shall be issued, in FORM GST RFD-06 , under section 54 of the CGST Act , read with section 73 or section 74 of the CGST Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of errors made while filing the returns in FORM GSTR-3B has been provided. Therefore, in case of discrepancies between the data furnished by the taxpayer in FORM GSTR-3B and FORM GSTR-1 , the proper officer shall refer to the said Circular and process the refund application accordingly. 19. Detailed guidelines laid down in subsequent paragraphs of this Circular covering various types of refund claims may also be followed while scrutinizing refund claims for completeness and eligibility. Re-crediting of electronic credit ledger on account of rejection of refund claim 20. In case of rejection of refund claim of unutilized/accumulated ITC due to ineligibility of the input tax credit under any provisions of the CGST Act and rules made thereunder, the proper officer shall have to issue a show cause notice in FORM GST RFD-08 , under section 54 of the CGST Act , read with section 73 or 74 of the CGST Act , requiring the applicant to show cause as to why: a. the refund amount corresponding to the ineligible ITC should not be rejected as per the relevant provisions of the law; and b. the amount of ineligible ITC should not be recovered as wrongl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected under the relevant provisions of the law and why the ineligible ITC of ₹ 15/- should not be recovered under section 73 or section 74 , as the case may be, with interest and penalty, if any. If the said notice is decided against the applicant, ₹ 15/-, along with interest and penalty, if any, shall be entered by the officer in the electronic liability register of the applicant through issuance of FORM GST DRC-07 . Further, ₹ 20/- would be recredited through FORM GST PMT-03 only after the receipt of an undertaking from the applicant to the effect that he shall not file an appeal or in case he files an appeal, the same is finally decided against the applicant. 24. Continuing with the above example, further assume that the applicant files an appeal against this order and the appellate authority decides wholly in the applicant s favour. It is hereby clarified in such a case the petitioner would file a fresh refund claim for the said amount of ₹ 20/- under the option of claiming refund On Account of Assessment/Provisional Assessment/Appeal/Any other order . Application for refund of integrated tax paid on export of services and supplies ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, for refund applications assigned to a State/UT tax officer, both the sanction order ( FORM GST RFD-04 / 06 ) and the corresponding payment order ( FORM GST RFD-05 ) for the sanctioned refund amount, under all tax heads, shall be issued by the State/UT tax officer only. 28. The sanctioned refund amounts, as entered in the payment orders issued by the Central and State/UT tax officers, shall be disbursed through the Public Financial Management System (PFMS) of the Controller General of Accounts (CGA), Ministry of Finance, Government of India. On filing of a refund application in FORM GST RFD-01 , the common portal shall generate a master file for the applicant containing the relevant details like name, GSTIN, bank account details etc. This master file shall be shared with PFMS for validation of the bank account details provided by the applicant in the refund application. Once the bank account is validated, PFMS will create a unique assessee code (combination of GSTIN + validated bank account number) for the applicant. This unique assessee code will be used by PFMS for all refund payments made to the applicant in the said bank account. Therefore, in order to avoid repeat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the sanction order number or the amount for which the payment order was originally issued. 32. It may be noted that the applicant, at the time of filing of refund application in FORM GST RFD-01 , can select a bank account only from the list of bank accounts provided by him at the time of registration in FORM GST REG-01 , or subsequently through filing a non-core amendment in FORM GST REG-14 . The same account details will be auto-populated in the payment order issued in FORM GST RFD-05 . Any change in these auto-populated bank account details shall not be allowed unless there is a validation error in relation to the same. 33. The disbursement status of the refund amount would be communicated by PFMS to the common portal. The common portal shall notify the same to the taxpayer by email/SMS. Such details shall also be available on the status tracking facility on the dashboard. 34. Section 56 of the CGST Act clearly states that if any tax ordered to be refunded is not refunded within 60 days of the date of receipt of application, interest at the rate of 6 per cent (notified vide notification No. 13/2017-Central Tax dated 28.06.2017 ) on the refund amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit has been availed during the relevant period for which the refund is being claimed, in the format enclosed as Annexure-B along with the application for refund claim. Such availment of ITC will be subject to restriction imposed under sub-rule (4) in rule 36 of the CGST rules inserted vide Notification No. 49/2019-CT dated 09.10.2019 . The applicant shall also declare the eligibility or otherwise of the input tax credit availed against the invoices related to the claim period in the said format for enabling the proper officer to determine the same. Self-certified copies of invoices in relation to which the refund of ITC is being claimed and which are declared as eligible for ITC in Annexure B , but which are not populated in FORM GSTR-2A , shall be uploaded by the applicant along with the application in FORM GST RFD 01 . It is emphasized that the proper officer shall not insist on the submission of an invoice (either original or duplicate) the details of which are available in FORM GSTR-2A of the relevant period uploaded by the applicant. 37. In case of refunds pertaining to items listed at (a), (c) and (e) in para 3 above, the common portal calculates t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of duties rebated under the Customs and Central Excise Duties Drawback Rules, 2017 , he shall be eligible for refund of unutilized input tax credit of Central tax/ State tax/ Union Territory tax / Integrated tax/ Compensation cess. It is also clarified that refund of eligible credit on account of State tax shall be available if the supplier of goods or services or both has availed of drawback in respect of Central tax. Guidelines for refund of tax paid on deemed exports 1 [ 41. Certain supplies of goods have been notified as deemed exports vide notification No. 48/2017-Central Tax dated 18.10.2017 under section 147 of the CGST Act . Further, the third proviso to rule 89(1) of the CGST Rules allows either the recipient or the supplier to apply for refund of tax paid on such deemed export supplies. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in notification No. 49/2017- Central Tax dated 18.10.2017 are also required to be furnished which includes an undertaking that the recipient of deemed export supplies shall not claim the refund in respect of such supplies and shall not avail any input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on coal for payment of Integrated tax in view of the proviso to section 11(2) of the Cess Act , which allows the utilization of the input tax credit of cess, only for the payment of cess on the outward supplies. 43. As regards the certain issues related to refund of accumulated input tax credit of compensation cess on account of zero-rated supplies made under Bond/Letter of Undertaking on which clarifications have been sought since GST roll out, the same have been examined and are clarified as below: a) Issue: A registered person uses inputs on which compensation cess is leviable (e.g. coal) to export goods on which there is no levy of compensation cess (e.g. aluminium). For the period July, 2017 to May, 2018, no ITC is availed of the compensation cess paid on the inputs received during this period. ITC is only availed of the Central tax, State tax/Union Territory tax or Integrated tax charged on the invoices for these inputs. This ITC is utilized for payment of Integrated tax on export of goods. Vide Circular No. 45/19/2018-GST dated 30.05.2018 , it was clarified that refund of accumulated ITC of compensation cess on account of zero-rated supplies made under Bond/Let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der GST. Inputs have been clearly defined to include any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. Since coal is an input used in the production of aluminium, albeit indirectly through the captive generation of electricity, which is directly connected with the business of the registered person, input tax credit in relation to the same cannot be denied. c) Issue: A registered person avails ITC of compensation cess (say, of ₹ 100/-) paid on purchases of coal every month. At the same time, he reverses a certain proportion (say, half i.e. ₹ 50/-) of the ITC of compensation cess so availed on purchases of coal which are used in making zero rated outward supplies. Both these details are entered in the FORM GSTR-3B filed for the month as a result of which an amount of ₹ 50/- only is credited in the electronic credit ledger. The reversed amount (₹ 50/-) is then shown as a 'cost' in the books of accounts of the registered person. However, the registered person declares ₹ 100/- as 'Net ITC' and uses the same in calculating the maximum refund amount which works out t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case. 45. Rule 96A (1) of the CGST Rules provides that any registered person may export goods or services without payment of Integrated tax after furnishing a LUT / bond and that he would be liable to pay the tax due along with the interest as applicable within a period of fifteen days after the expiry of three months or such further period as may be allowed by the Commissioner from the date of issue of the invoice for export, if the goods are not exported out of India. The time period in case of services 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. It has been reported that the exporters have been asked to pay Integrated tax where the goods have been exported but not within three months from the date of the issue of the invoice for export. In this regard, it is emphasized that exports have been zero rated under the IGST Act and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng bill / bill of export. During the processing of the refund claim, the value of the goods declared in the GST invoice and the value in the corresponding shipping bill / bill of export should be examined and the lower of the two values should be taken into account while calculating the eligible amount of refund. 48. It is clarified that the realization of consideration in convertible foreign exchange, or in Indian rupees wherever permitted by Reserve Bank of India, is one of the conditions for export of services. In case of export of goods, realization of consideration is not a pre-condition. In rule 89 (2) of the CGST Rules , a statement containing the number and date of invoices and the relevant Bank Realization Certificates (BRC) or Foreign Inward Remittance Certificates (FIRC) is required in case of export of services whereas, in case of export of goods, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices is required to be submitted along with the claim for refund. It is therefore clarified that insistence on proof of realization of export proceeds for processing of refund claims rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit is admissible. Restrictions imposed by sub-rule (10) of rule 96 of the CGST Rules 51. Sub-rule (10) of rule 96 of the CGST Rules , restricted exporters from availing the facility of claiming refund of Integrated tax paid on exports in certain scenarios. It was intended that exporters availing benefit of certain notifications would not be eligible to avail the facility of such refund. However, representations were received requesting that exporters who have received capital goods under the Export Promotion Capital Goods Scheme (hereinafter referred to as EPCG Scheme ), should be allowed to avail the facility of claiming refund of the Integrated tax paid on exports. GST Council, in its 30th meeting held in New Delhi on 28th September, 2018, accorded approval to the proposal of suitably amending the said sub-rule along with sub-rule (4B) of rule 89 of the CGST Rules prospectively in order to enable such exporters to avail the said facility. Notification No. 54/2018-Central Tax dated the 9th October, 2018 was issued to carry out the changes recommended by the GST Council. In addition, notification No. 39/2018-Central Tax dated 4th September, 2018 was res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nputs which are procured at equal or lower rate of GST than the rate of GST on outward supply, by not including the amount of such ITC while calculating the maximum refund amount as specified in rule 89(5) of the CGST Rules . The matter has been examined and the following issues are clarified: a) Refund of unutilized ITC in case of inverted tax structure, as provided in section 54(3) of the CGST Act , is available where ITC remains unutilized even after setting off of available ITC for the payment of output tax liability. Where there are multiple inputs attracting different rates of tax, in the formula provided in rule 89(5) of the CGST Rules , the term Net ITC‟ covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax. b) The calculation of refund of accumulated ITC on account of inverted tax structure, in cases where several inputs are used in supplying the final product/output, can be clearly understood with the help of following example: i. Suppose a manufacturing process involves the use of an input A (attracting 5 per cent GST) and input B (attracting 18 per cent GST) to manufacture output Y (attracting 12 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collected in excess is also paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8 , as the case may be, and the said amount has been credited to the electronic cash ledger of the deductee, the deductee can adjust the same while discharging his output liability or he can claim refund of the same under the category refund of excess balance in the electronic cash ledger . Debit of electronic credit ledger using FORM GST DRC-03 57. Various representations have been received seeking clarifications on certain refund related issues, the solutions to which involve debiting the electronic credit ledger using FORM GST DRC-03 . These issues are clarified as under: Sl.No. Issue Clarification 1 Certain registered persons have reversed, through return in FORM GSTR-3B filed for the month of August, 2018 or for a subsequent month, the accumulated input tax credit (ITC) required to be lapsed in terms of notification No. 20/2018-Central Tax (Rate) dated 26.07.2018 read with circular No. 56/30/2018-GST dated 24.08.2018 (hereinafter referred to as the said notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST RFD-06 and the payment order in FORM GST RFD-05 . c) All refund applications for unutilized ITC on account of accumulation due to inverted tax structure for subsequent tax period(s) shall be filed in FORM GST RFD-01 under the category refund of unutilized ITC on account of accumulation due to inverted tax structure . 2 The clarification at Sl. No. 1 above applies to registered persons who have already reversed the ITC required to be lapsed in terms of the said notification through return in FORM GSTR-3B . What about those registered persons who are yet to perform this reversal? It is hereby clarified that all those registered persons required to make the reversal in terms of the said notification and who have not yet done so, may reverse the said amount through FORM GST DRC-03 instead of through FORM GSTR-3B . 3 What shall be the consequence if any registered person reverses the amount of credit to be lapsed, in terms the said notification, through the return in FORM GSTR-3B for any month subsequent to August, 2018 or through FORM GST DRC-03 subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of the said notifications, the refund of input tax credit, availed in respect of such inputs received under the said notifications for export of goods, shall be granted. b) This refund of accumulated ITC under rule 89(4B) of the CGST Rules shall be applied under the category any other instead of under the category refund of unutilized ITC on account of exports without payment of tax in FORM GST RFD-01 and shall be accompanied by all supporting documents required for substantiating the refund claim under the category refund of unutilized ITC on account of exports without payment of tax . After scrutinizing 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, 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 . Refund of Integrated Tax paid on Exports 58. The refund of Integrated tax p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard, it is clarified that the limit of rupees one thousand shall be applied for each tax head separately and not cumulatively. 61. Presently, ITC is reflected in the electronic credit ledger on the basis of the amount of the ITC availed on self-declaration basis in FORM GSTR-3B for a particular tax period. It may happen that the goods purchased against a particular tax invoice issued in a particular month, say August 2018, may be declared in the FORM GSTR-3B filed for a subsequent month, say September 2018. This is inevitable in cases where the supplier raises an invoice, say in August, 2018, and the goods reach the recipient s premises in September, 2018. Since GST law mandates that ITC can be availed only after the goods have been received, the recipient can only avail the ITC on such goods in the FORM GSTR-3B filed for the month of September, 2018. However, it has been reported that tax authorities are excluding such invoices from the calculation of refund of unutilized ITC filed for the month of September, 2018. In this regard, it is clarified that Net ITC‟ as defined in rule 89(4) of the CGST Rules means input tax credit availed on inputs and input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the notice of the Board. Hindi version would follow. (Yogendra Garg) Principal Commissioner y.garg@nic.in ***** Sl.No . Type of Refund Declaration/Statement/Undertaking/Certificates to be filled online Supporting documents to be additionally uploaded 1 Refund of unutilized ITC on account of exports without payment of tax Declaration under second and third proviso to section 54(3) Copy of GSTR-2A of the relevant period Undertaking in relation to sections 16(2)(c) and section 42(2) Statement of invoices (Annexure-B) Statement 3 under rule 89(2)(b) and rule 89(2)(c) Self-certified copies of invoices entered inAnnexure-B whose details are not found in GSTR-2A of the relevant period Statement 3A under rule 89(4) BRC/FIRC in case of export of services and shipping bill (only in case of exports made through non-EDI ports) in case of goods 2 Refund of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es entered inAnnexure-A whose details are not found in GSTR-2A of the relevant period Statement 4 under rule 89(2)(d) and rule 89(2)(e) Self-declaration regarding non-prosecution under sub-rule (1) of rule 91 of the CGST Rules for availing provisional refund Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise 5 Refund of ITC unutilized on account of accumulation due to inverted tax structure Declaration under second and third proviso to section 54(3) Copy of GSTR-2A of the relevant period Declaration under section 54(3)(ii) Statement of invoices (Annexure-B) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-certified copies of invoices entered inAnnexure-B whose details are not found in GSTR-2A of the relevant period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment / provisional assessment / appeal / any other order Undertaking in relation to sections 16(2)(c) and section 42(2) Reference number of the order and a copy of the Assessment / Provisional Assessment / Appeal / Any Other Order Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise Reference number/proof of payment of pre-deposit made earlier for which refund is being claimed 11 Refund on account of any other ground or reason Undertaking in relation to sections 16(2)(c) and section 42(2) Documents in support of the claim Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise Annexure-B Statement of invoices to be submitted with application for refund of unutilized ITC Sr. No. GSTIN of the Supplier Name of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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