Provisional refund to zero-rated supply of goods or services [section 54(6) of CGST Act read with rule 91 of CGST Rules] - GST Ready Reckoner - GST

Provisional refund to zero-rated supply of goods or services As per section 54(6) of CGST Act 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 recommendations of the Council, refund on a provisional basis, 90% . of the total amount so claimed, excluding the amount of input tax credit provisionally accepted (Omitted by F.A. 2023 w.e.f. 01.10.2023 ) , in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under section 54(5) of CGST Act for final settlement (Remaining 10%) of the refund claim after due verification of documents furnished by the applicant. Explanation (ba) of Section 54 of CGST Act in case of zero-rated supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, the due date for furnishing of return under section 39 of CGST Act in respect of such supplies. Conditions, limitation and safeguards ( Rule 91 of CGST Rules ) Condition - no offence during 5 years :- The provisional refund in accordance with the provisions of section 54(6) shall be granted subject to the 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 2.5 crore rupees. Para 46 Circular 125/44/2019 dated 18-11-2019 , the facility of export under LUT is available to all exporters in terms of Notification No. 37/2017- Central Tax dated 4th October, 2017, except to those who have been prosecuted for any offence under the CGST Act or the IGST Act or any of the existing laws in force in a case where the amount of tax evaded exceeds 2.5 crore rupees. Para 2(d) of the Circular No. 8/8/2017-GST dated 4th October, 2017, mentions that a person intending to export under LUT is required to give a self-declaration at the time of submission of LUT that he has not been prosecuted . Persons who are not eligible to export under LUT are required to export under bond . It is clarified that this requirement is already satisfied in case of exports under LUT and asking for self declaration with every refund claim where the exports have been made under LUT is not warranted. Further, as per Circular 40/14/2018-GST dated 06-04-2018 , the amendments in Circular No. 8/8/2017-GST made it clear that application for LUT shall be done on the common portal, and it shall be deemed to be accepted as soon as an acknowledgement for the same, bearing the Application reference number (ARN), is generated online Grant within 7 days :- The proper officer, after scrutiny of the claim and the evidence submitted in support thereof and on being prima facie satisfied that the amount claimed as refund under rule 91(1) of CGST Rules is due to the applicant in accordance with the provisions of sub-section (6) of section 54, shall make an order in FORM GST RFD-04 , sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of the acknowledgement under rule 90(1) or (2) of CGST Rules . The order issued in FORM GST RFD-04 shall not be required to be revalidated by the proper officer. Payment order :- The proper officer shall issue a payment order in FORM GST RFD-05 for the amount sanctioned under rule 91(2) of CGST Rules and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund on the basis of a consolidated payment advice. The payment order in FORM GST RFD-05 shall be required to be revalidated where the refund has not been disbursed within the same financial year in which the said payment order was issued. Disbursal of Refund :- The Central Government shall disburse the refund based on the consolidated payment advice issued under rule 91(3) of CGST Rules . The doctrine of unjust enrichment for zero rated supply As per clause (b) section 54(8) of CGST Act, Notwithstanding anything contained in section 54(5), stipulated that the refundable amount shall, instead of being credited to the consumer welfare fun, be paid to the applicant is such amount relatable to refund of unutilised input tax credit u/s 54(3) of CGST Act 2017. Refund of accumulated ITC in the respect of invoice whose details are not reflected in Form GSTR-2A of application [ Circular No. 139/09/2020-GST 10th June, 2020 ] Clarification:- In this context it is noteworthy that before the issuance of Circular No. 135/05/2020-GST dated 31st March, 2020 , refund was being granted even in respect of credit availed on the strength of missing invoices (not reflected in FORM GSTR-2A ) which were uploaded by the applicant along with the refund application on the common portal. However, vide Circular No.135/05/2020 GST dated the 31st March, 2020, the refund related to these missing invoices has been restricted. Now, the refund of accumulated ITC shall be restricted to the ITC available on those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. The aforesaid circular does not in any way impact the refund of ITC availed on the invoices / documents relating to imports, ISD invoices and the inward supplies liable to Reverse Charge (RCM supplies) etc.. It is hereby clarified that the treatment of refund of such ITC relating to imports, ISD invoices and the inward supplies liable to Reverse Charge (RCM supplies) will continue to be same as it was before the issuance of Circular No. 135/05/2020- GST dated 31st March, 2020.