Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger – Regarding - GST - States - CCT’s Ref No. A(1)/170/2017

Office of the Commissioner of State Tax Telangana State :: Hyderabad CIRCULAR No.2 CCT s Ref No. A(1)/170/2017, Dt. 06-02-2018 Sub:- Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger Regarding. It is informed that Due to the non-availability of the refund module on the common portal, it has been decided by the competent authority, on the recommendations of the Council, that the applications/documents/forms pertaining to refund claims on account of inverted duty structure (including supplies in terms of notification Nos. 40/2017-State Tax (Rate) issued in G.O.Ms No. 253, Revenue (CT-II) Department, dt. 23-11-2017 (40/2017 - Central Tax (Rate)) and 41/2017-Integrated Tax (Rate) both dated 23.10.2017), deemed exports and excess balance in electronic cash ledger shall be filed and processed manually till further orders. In this regard, the Commissioner of State Tax, in exercise of his powers conferred under Section 168 (1) of the Telangana Goods and Services Tax Act, 2017 hereby clarifies that the provisions in CCT s Ref No. A(1)/170/2017, Dt. 29-12-2017, shall also be applicable to the following types of refund in as much as they pertain to the method of filing of the refund claim and its processing which is consistent with the relevant provisions of the TGST Act, 2017 (hereafter referred to as the TGST Act ) and the TGST Rules, 2017 (hereafter referred to as the TGST Rules ):- (i) 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 Government on the recommendations of the Council (Section 54(3) of the TGST Act refers); (ii) refund of tax on the supply of goods regarded as deemed exports; and (iii) refund of balance in the electronic cash ledger. 2.0 It is clarified that refund claims in respect of zero-rated supplies and on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger shall be filed for a tax period on a monthly basis in FORM GST RFD-01A . However, in case registered persons having aggregate turnover of up to ₹ 1.5 crore in the preceding financial year or the current financial year are opting to file FORM GSTR-1 quarterly (notification issued in G.O.Ms No. 294, dt. 20-12-2017 (Corresponding Central Tax Notification No. 57/2017 Central Tax, Dt. 15-11-2017) refers), such persons shall apply for refund on a quarterly basis. Further, it is stated that the refund claim for a tax period may be filed only after filing the details in FORM GSTR-1 for the said tax period. It is also to be ensured that a valid return in FORM GSTR-3B has been filed for the last tax period before the one in which the refund application is being filed. Since the date of furnishing of FORM GSTR-1 from July, 2017 onwards has been extended while the dates of furnishing of FORM GSTR-2 and FORM GSTR-3 for such period are yet to be notified, it has been decided by the competent authority to sanction 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 TGST Act have not been complied with in respect of the amount refunded. This undertaking should be submitted manually along with the refund claim till the same is available FORM GST RFD-01A on the common portal. 3.0 In case of refund claim arising due to inverted duty structure, the following statements - Statement 1 and Statement 1A of FORM GST RFD-01A have to be filled:- Statement 1[rule 89(5)] Refund Type: ITC accumulated due to inverted tax structure [clause (ii) of first proviso to Section 54(3)] (Amount in Rs.) Turnover of inverted rated supply of goods Tax payable on such inverted rated supply of goods Adjusted total turnover Net input tax credit Maximum refund amount to be claimed [(1 4 3)-2] 1 2 3 4 5 Statement 1A [rule 89(2)(h)] Refund type: ITC accumulated due to inverted tax structure [clause (ii) of first proviso to Section 54(3)] Sl. N o. Details of invoices of inward supplies received Tax paid on inward supplies Details of invoices of outward supplies issued Tax paid on outward supplies No Date Taxable Value Integra ted Tax Centr al Tax State/Union territory Tax No. Date Taxable Value Integrated Tax Central Tax State/Union territory Tax 1 2 3 4 5 6 7 8 9 10 11 12 13 4.0 Whereas, the Government has issued notification issued in G.O.Ms No. 289, Revenue (CT-II) Department, Dt. 18-12-2017 (CBEC Notification No. 48/2017-Central Tax dated 18.10.2017) under Section 147 of the TGST Act wherein certain supplies of goods have been notified as deemed export. Further, the third proviso to Rule 89(1) of the TGST Rules allows 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 issued in G.O.Ms No. 290, Revenue (CT-II) Department, Dt. 18-12-2017 (CBEC Notification No. 49/2017-Central Tax dated 18.10.2017) are also required to be furnished which includes an undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and that no input tax credit on such supplies has been availed of by him. The undertaking should be submitted manually along with the refund claim. Similarly, 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 issued by CBEC needs to be complied with. 4.1 Further, as per the provisions of Rule 89(2)(g) of the TGST Rules, the following statement 5B of FORM GST RFD-01A is required to be furnished for claiming refund on supplies declared as deemed exports:- Statement 5B [rule 89(2)(g)] Refund type: On account of deemed exports (Amount in Rs) Sl. No. Details of invoices of outward supplies in case refund is claimed by supplier/ Details of invoices of inward supplies in case refund is claimed by recipient Tax paid No. Date Taxable Value Integrated Tax Central Tax State/Union Territory Tax Cess 1 2 3 4 5 6 7 8 5.0 It is reiterated that para 2.5 of Circular issued CCT s Ref No. A(1)/170/2017, Dt. 29-12-2017, (corresponding CBEC Circular No. 17/17/2017-GST dated 15.11.2017) may be referred to in order to ascertain the jurisdictional proper officer to whom the manual application for refund is to be submitted. Where any amount claimed as refund is rejected under Rule 92 of the TGST Rules, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited 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. Further, the payment of the sanctioned refund amount shall be made only by the respective tax authority of the Central or State Government. Thus, 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 working days for the purpose of payment of the relevant sanctioned refund amount of tax or cess, as the case may be. This time limit of seven working days is also applicable to refund claims in respect of zero-rated supplies being processed as per Circular issued CCT s Ref No. A(1)/170/2017, Dt. 29-12-2017 ( corresponding CBEC Circular No. 17/17/2017-GST dated 15.11.2017) as against the time limit of three days prescribed in para 4 of the said Circular. It must be ensured that the timelines specified under Section 54(7) and Rule 91(2) of the TGST Rules for the sanction of refund are adhered to. 6.0 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 by the Central tax authority and a sanction order is passed in accordance with the provisions of Rule 91(2) of the TGST Rules, the Central tax authority shall communicate the same, through the nodal officer, to the State tax authority for making payment of the sanctioned refund amount in relation to State tax and vice versa. The aforesaid communication shall primarily be made through e-mail attaching the scanned copies of the sanction order [ FORM GST RFD-04 and FORM GST RFD-06 ], the application for refund in FORM GST RFD-01A and the Acknowledgement Receipt Number (ARN). Accordingly, the jurisdictional proper officer of Central or State Tax, as the case may be, shall issue FORM GST RFD-05 and send it to the DDO for onward transmission for release of payment. After release of payment by the respective PAO to the applicant s bank account, the nodal officer of Central tax and State tax authority shall inform each other. The manner of communication as referred earlier shall be followed at the time of final sanctioning of the refund also. 7.0 In case of refund claim for the balance amount in the electronic cash ledger, upon filing of FORM GST RFD-01A as per the procedure laid down in para 2.4 of Circular issued CCT s Ref No. A(1)/170/2017, Dt. 29-12-2017 ( Corresponding CBEC Circular No. 17/17/2017-GST dated 15.11.2017), the amount of refund claimed shall get debited in the electronic cash ledger. Sd/- V. Anil Kumar Commissioner of State Tax