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Withhold / Deduct the refund [Section 54(10) to (12) of CGST Act] - GST Ready Reckoner - GSTExtract Withhold / Deduct the refund (i) Where any refund is due to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer may- (a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be; (b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law. ( section 54(10) of CGST ) Explanation For the purposes of this sub-section, the expression specified date shall mean the last date for filing an appeal under this Act. (ii) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine. ( section 54(11) of CGST Act ) (iii) Where a refund is withheld under section 54(11) of CGST 2017, the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund. ( section 54(12) of CGST ) The Government vide Notification No. 13/2017- Central Tax dated 28-06-2017 has prescribed, on the recommendation of the Council, 6% as the rate of interest for a refund withheld under sub-section (11) of section 54 What are the modalities to be followed when refund is withheld on the request of the jurisdictional Commissioner of Central /State Tax. Where refund is withheld in accordance with request from jurisdictional commissionerate, the proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the common portal. The proper officer of central tax or State tax or Union territory tax, as the case may be, shall pass an order in Part B of FORM GST RFD-07 . Where the applicant becomes entitled to refund of the amount withheld as above, the concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to refund the amount after passing an order in FORM GST RFD-06 . As per Circular no.17/17/2017-GST , ( Superseded Vide Circular No. 125/44/2019-GST dated 18-11-2019 ) any order regarding withholding of such refund or its further sanction respectively in PART-B of Form GST RFD-07 or Form GST RFD-06 shall be done manually till the refund module is operational on the common portal.
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