IGST Refund - CBEC's Customs Manual 2023 - Customs

8 IGST Refund 8.1 Introduction 8.1.1 Under GST, exports and supplies to SEZ are zero rated as per Section 16 of the IGST Act, 2017 . By zero rating, it is meant that the entire supply chain of a particular supply is tax free, i.e., there is no burden of tax either on the input side or output side. 8.1.2 As per Section 16(3) of the IGST Act, 2017 , a registered person making a zero-rated supply is eligible to claim refund in accordance with the provisions of Section 54 of the CGST Act, 2017 , under either of the following options, namely: (i) He may supply goods or services or both under bond or letter of undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit of CGST, SGST / UTGST and IGST; or (ii) He may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied. 8.1.3 As per Rule 96 of the CGST Rules 2017 , dealing with refund of IGST paid on goods exported out of India, 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, once both the export general manifest (EGM) and valid return in Form GSTR-3 or Form GSTR-3B, as the case may be, has been fed. Thus, once the shipping bill and the EGM is filed and a valid return is filed, the application for refund shall be considered to have been filed and refund shall be processed. 8.1.4 IGST Refund module for exports is operational in ICES since 10.10.2017. As per Rule 96 of the CGST Rules 2017 , dealing with refund of IGST paid on goods exported out of India, 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, once both the export general manifest (EGM) and valid return in Form GSTR-3 or Form GSTR- 3B, as the case may be, has been filed. Rule 96 further stated that the information on GSTR 1 shall then be transmitted electronically to Customs and the System designated by Customs shall process the refund claim. 8.1.5 The IGST refund module has been designed in line with the above rule and has an inbuilt mechanism to automatically grant refund after validating the Shipping Bill data available in ICES against the GST Returns data transmitted by GSTN. The matching between the two data sources is done at Invoice level and if the necessary matching is successful, ICES shall process the claim for refund and the relevant amount of IGST paid with respect to each Shipping Bill or Bill of export shall electronically credited to the exporter s bank account as mentioned with the Customs authorities. 8.2 Pre-requisites and precautions required to be taken by exporters for successful processing of refund claims: i. file GSTR 3B with taxable value for export and IGST paid against exports indicated in appropriate fields. ii. file GSTR 1 or Table 6A for the exports made with correct details such as Invoice number, Taxable value, IGST paid, Shipping Bill number, Shipping Date and Port Code. iii. ensuring aggregate IGST paid amount claimed in GSTR 1 or Table 6A is not greater than the IGST paid amount indicated in Table 3.1(b) of GSTR 3B of the corresponding month iv. use Table 9 of GSTR 1 of the following month to amend the records of previous month so as to take care of issues mentioned in paras (ii) and (iii) above. 8.3 Ensuring hassle free processing of refund claims: a) Jurisdictional officers at gateway port may initiate swift penal action against shipping lines/ agents who fail to file either regular or supplementary EGMs electronically for cargo originating from ICDs. b) Jurisdictional officers in ICDs should ensure filing of local EGM i.e., train or truck summary, as the case maybe, immediately after cargo leaves the port, liaising with the jurisdictional officers at the port for incorporation of Shipping Bills pertaining to the cargo originating in ICDs, in the EGMs filed at gateway port by the Shipping lines/agents and rectification of errors in local and gateway EGM, wherever necessary. c) Jurisdictional officers at gateway port should strictly monitor the EGM pendency and error reports available in ICES and get the EGM errors resolved in an expeditious manner by asking the Shipping lines/ agents to file requisite amendments and approving those amendments on ICES. Errors in shipping bill or in local EGM (i.e., truck or train summary), the remedial action has to be taken by jurisdictional officer in ICD. 8.4 Sanction of pending IGST refund claims where the records have not been transmitted from the GSTN to DG Systems 8.4.1 As an interim measure for those cases where the records have not been transmitted by GSTN to Customs EDI system, to overcome the problem of refund blockage, subject to undertakings/ submission of CA certificates by the exporters and post refund audit scrutiny, the following procedure shall be followed: A. Cases where there is no short payment: (i) The Customs policy wing would prepare a list of exporters whose cumulative IGST amount paid against exports and interstate domestic outward supplies, for the period July 2017 to March 2018 mentioned in GSTR-3B is greater than or equal to the cumulative IGST amount indicated in GSTR-1 for the same period. Customs policy wing shall send this list to GSTN. (ii) GSTN shall send a confirmatory e-mail to these exporters regarding the transmission of records to Customs EDI system. (iii) The exporters whose refunds are processed/ sanctioned would be required to submit a certificate from Chartered Accountant before 31st October 2018 to the Customs office at the port of export to the effect that there is no discrepancy between the IGST amount refunded on exports and the actual IGST amount paid on exports of goods for the period July 2017 to March 2018. In case there are exports from multiple ports, the exporter is at liberty to choose any of the ports of export for submission of the said certificate. (iv) A copy of the certificate shall also be submitted to the jurisdictional GST office (Central/ State). The concerned Customs zone shall provide the list of GSTINs who have not submitted the CA certificate to the Board by the 15th November 2018. (v) Non submission of CA certificate shall affect the future IGST refunds of the exporter. (vi) The list of exporters whose refunds have been processed as above shall be sent to DG (Audit)/ DG (GST) by the Board. B. Cases where there is short payment: (i) In cases where there is a short payment of IGST i.e. cumulative IGST amount paid against exports and interstate domestic outward supplies together, for the period of July 2017 to March 2018 mentioned in GSTR-3B is less than the cumulative IGST amount indicated in GSTR-1 for the same period, the Customs policy wing would send the list of such exporters to the GSTN and all the Chief Commissioner of Customs. (ii) e-mails shall be sent by GSTN to each exporter referred in para (i) above so as to inform the exporter that their records are held up due to short payment of IGST. The e--mail shall also advise the exporters to observe the procedure under this circular. (iii) The exporters would have to make the payment of IGST equal to the short payment in GSTR 3B of subsequent months so as to ensure that the total IGST refund being claimed in the Shipping Bill/GSTR-1(Table 6A) is paid. The proof of payment shall be submitted to Assistant/Deputy Commissioner of Customs in charge of port from where the exports were made. In case there are exports from multiple ports, the exporter is at liberty to choose any of the ports of export. (iv) Where the aggregate IGST refund amount for the said period is upto Rs. 10 lacs, the exporter shall submit proof of payment (self-certified copy of challans) of IGST payment to the concerned Customs office at the port of export. However, where the aggregate IGST refund amount for the said period is more than Rs. 10 lacs, the exporter shall submit proof of payment (self-certified copy of challans) of IGST to the concerned Customs office at the port of export along with a certificate from chartered Accountant that the shortfall amount has been liquidated. (v) The exporter would give an undertaking they would return the refund amount in case it is found to be not due to them at a later date. (vi) The Customs zones shall compile the list of exporters (GSTIN only), who have come forward to claim refund after making requisite payment of IGST towards short paid amount and complied with other prescribed requirements. (vii) The compiled list may be forwarded to Customs policy wing, DG (Audit) and DG (GST). Customs policy wing shall forward the said list of GSTINs to GSTN. On receipt of the list of exporters from Customs policy wing, GSTN shall transmit the records of those exporters to Customs EDI system. (viii) The exporters whose refunds are processed/ sanctioned as above would be required to submit another certificate from Chartered Accountant/ Cost Accountant before 31st October, 2018 to the same Customs office at the port of export to the effect that there is no discrepancy between the IGST amount refunded on exports and the actual IGST amount paid on exports of good for the period July 2017 to March 2018. A copy of the certificate shall also be submitted to the jurisdictional GST office (Central/ State). The concerned Customs zone shall provide the list of GSTINs who have not submitted the CA certificate to the Board by the 15th November 2018. (ix) Non submission of CA certificate shall affect the future IGST refunds of the exporter. Post refund audit 4. C. The exporters would be subjected to a post refund audit under the GST law. DG (Audit) shall include the above referred GSTINs for conducting Audit under the GST law. The inclusion of IGST refund aspects in Audit Plan of those units may be ensured by DG (Audit). In case, departmental Audit detects excess refunds to the exporters under this procedure, the details of such detections may be communicated to the concerned GST formations for appropriate action. D. DG (GST) shall send the list of exporters to jurisdictional GST officers (both Centre / State) informing that these exporters have taken benefit of the procedure prescribed in this circular. The jurisdictional GST formations shall also verify the payment particulars at their end 8.5 GST refunds-mechanism to verify the IGST payments for goods exported out of India in certain cases 8.5.1 Instances of availment of IGST refund using fraudulent ITC claims by some exporters have been observed by various authorities. Exporters have availed ITC on the basis of ineligible documents or fraudulently and utilized that credit for payment of IGST on goods exported out of India. It has also been observed in several cases that there is huge variation between the FOB value declared in the Shipping Bill and the Taxable value declared in GST Return apparently to effect higher IGST pay out leading to encashment of credit. It is decided to verify the IGST payments through the respective GST field formations. The procedure specified in the instruction 15/2017-Cus dated 09.10.2017 stand modified to the extent as under: A. Identification of Suspicious cases: DG (Systems) shall work out the suitable criteria to identify risky exporters at the national level and forward the list of said risky exporters to Risk Management Centre for Customs (RMCC) and respective Chief Commissioners of Central Tax. DG (Systems) shall inform the respective Chief Commissioner of Central Tax about the past IGST refunds granted to such risky exporters (along with details of bank accounts in which such refund has been disbursed). B. Inserting Alert in the System: RMCC shall insert alerts for all such risky exporters and make 100% examination mandatory of export consignments relating to those risky exporters. Also, alert shall be placed to suspend IGST refunds in such cases. C. Examination of the export goods: Customs officers shall examine the consignment as per the RMCC alert. In case the outcome of examination tallies with the declaration in the Shipping Bill subject to no other violation of any of provision of the Customs Act, 1962 or other laws being observed, the consignment may be cleared as per the regular practice. D. Suspension of IGST refunds: Notwithstanding the clearance of the export consignments as per para C above, such Shipping Bills shall be suspended for IGST refund by the Deputy or Assistant Commissioner of Customs dealing with refund at the port of export. E. Verification by GST formations: (i)Chief Commissioner of Central Tax shall get the verification of the IGST refund claims and other related aspects done in accordance with the Standard Operating procedure to be issued by the GST policy wing. (ii)The GST formation shall furnish a report to the respective Chief Commissioner of Central Tax within 30 days specifying clearly whether the amount of IGST paid and claimed/ sanctioned as refund was in accordance with the law or not. (iii) Chief Commissioner of Central Tax shall compile and forward report of all cases to RMCC and concerned customs port of export within 5 working days thereafter. [Refer Rule 96 of the CGST Rules 2017 , Circular 42/2017- Customs dated 7th November, 2017, Circular 5/2018- Customs dated 23rd February, 2018 , Circular 6/2018- Customs dated 16th March, 2018 , Circular 12/2018-Customs dated 29th May, 2018 , Circular 33/2018- Customs dated 19.09.2018 , Circular 37/2018-Customs dated 09.10.2018 , Circular 40/2018-Customs dated 24.10.2018 ]