Refund claimed by the recipient of supplies regarded as deemed export - GST Ready Reckoner - GST

Refund claimed by the recipient of supplies regarded as deemed export Application of refund filed In case Deemed export, as per third proviso of rule 89(1) of CGST Rules 2017 , by a) the recipient of the deemed export b) The supplier of deemed export supplies in case where the recipient does not avail of ITC on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund Relevant date for filing of refund claim in case of deemed exports and in which form As per explanation 2(b) section 54 of CGST Act 2017 , in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished . The claim needs to be filed within 2 years from this date. read with Circular No. 166/22/2021-GST dated 17th Nov, 2021 Q4 Whether relevant date for the refund of tax paid on supplies regarded as deemed export by recipient is to be determined as per clause (b) of Explanation (2) under section 54 of CGST Act and if so, whether the date of return filed by the supplier or date of return filed by the recipient will be relevant for the purpose of determining relevant date for such refunds? On perusal of the above, it is clear that clause (b) of Explanation (2) under section 54 of the CGST Act is applicable for determining relevant date in respect of refund of amount of tax paid on the supply of goods regarded as deemed exports, irrespective of the fact whether the refund claim is filed by the supplier or by the recipient. Further, as the tax on the supply of goods, regarded as deemed export, would be paid by the supplier in his return, therefore, the relevant date for purpose of filing of refund claim for refund of tax paid on such supplies would be the date of filing of return, related to such supplies, by the supplier. Refund application shall be filed under GST-RFD Form - 01 [subject to the provisions of rule 10B Aadhar authentication ], electronically , through the common portal. Documents required to be filed where the claim is on account of deemed exports As per Rule 89(2)(g) of CGST Rules A statement containing the number and date of invoices along with such other evidence as may be notified in this behalf, in a case where the refund is on account of deemed exports. In case of refund is sought by the supplier of deemed export supplies [ Notification No. 49/2017-Central Tax dated 18th October, 2017 ] Acknowledgment by the jurisdictional Tax officer of the Advance Authorisation holder or Export Promotion Capital Goods Authorisation holder, as the case may be, that the said deemed export supplies have been received by the said Advance Authorisation or Export Promotion Capital Goods Authorisation holder, or a copy of the tax invoice under which such supplies have been made by the supplier, duly signed by the recipient Export Oriented Unit that said deemed export supplies have been received by it. An undertaking by the recipient of deemed export supplies that no input tax credit on such supplies has been availed of by him. An undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and the supplier may claim the refund. 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 needs to be complied with. 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 needs to be complied with. Eligible amounts for refund in case of deemed exports While filing GST - RFD-01 (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, or 2. ITC availed for the particular tax period, or 3. Amount entered by taxpayer in refund claim matrix. In case the supplier claims refund on account of deemed export supplies, will the recipient be eligible for refund of ITC in respect of other inputs/input services which have been used in making zero rated supply? Yes. As per Rule 89(4A) In the case of supplies received on which the supplier has availed the benefit of notification No. 48/2017-Central Tax dated the 18th October, 2017 , refund of input tax credit, availed in respect of other inputs or input services used in making zero-rated supply of goods or services or both, shall be granted. Refund claimed by the recipients of supplies regarded as deemed export [ Circular No. 172/04/2022-GST dated 6th July, 2022 ] Issues 1 :- Whether the Input Tax Credit (ITC) availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports would be subjected to provisions of Section 17 of the CGST Act, 2017. Clarification :- The refund in respect of deemed export supplies is the refund of tax paid on such supplies. However, the recipients of deemed export supplies were facing difficulties on the portal to claim refund of tax paid due to requirement of the portal to debit the amount so claimed from their electronic credit ledger. Considering this difficulty, the tax paid on such supplies, has been made available as ITC to the recipients vide Circular No. 147/03/2021-GST dated 12.03.2021 only for enabling them to claim such refunds on the portal. The ITC of tax paid on deemed export supplies, allowed to the recipients for claiming refund of such tax paid, is not ITC in terms of the provisions of Chapter V of the CGST Act, 2017. Therefore, the ITC so availed by the recipient of deemed export supplies would not be subjected to provisions of Section 17 of the CGST Act, 2017. Issue 2:- Whether the ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is to be included in the Net ITC for computation of refund of unutilised ITC under rule 89(4) rule 89 (5) of the CGST Rules, 2017. Clarification :- The ITC of tax paid on deemed export supplies, allowed to the recipients for claiming refund of such tax paid, is not ITC in terms of the provisions of Chapter V of the CGST Act, 2017. Therefore, such ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is not to be included in the Net ITC for computation of refund of unutilised ITC on account of zero-rated supplies under rule 89(4) or on account of inverted rated structure under rule 89(5) of the CGST Rules, 2017.