EXAMINATION OF REFUND APPLICATIONS AND THE ACTION TO BE TAKEN BY OFFICERS - Handbook of GST Law & Procedures (CBIC) [October 2024] - GST

7. EXAMINATION OF REFUND APPLICATIONS AND THE ACTION TO BE TAKEN BY OFFICERS 7.1 The Deputy/Assistant Commissioner of Central Tax is designated as Proper Officer for the purpose of granting refund and all related actions specified under Section 54 of CGST Act, 2017 and Rules 89 to 96 of CGST Rules, 2017, like issuance of acknowledgement, issuance of Deficiency Memo, issuance of Provisional Refund Sanction order, Payment order, Final order and Refund Withhold order. 7.2 Refund Application in FORM GST RFD-01 will be filed by the applicant on the common portal for the purpose of refund, along with supporting documents, as provided in Annexure-A of CBIC Circular No. 125/44/2019-GST dated 18.11.2019. 7.3 The Application Reference Number (ARN) will be generated only after the applicant has completed the process of filing the refund application in FORM GST RFD-01 , and has completed uploading of all the relevant documents and wherever required, the amount has been debited from the Electronic Credit/Cash Ledger. 7.4 Acknowledgement or a Deficiency Memo should be issued within the stipulated period of 15 days, starting from the date of generation of ARN. The acknowledgement for the complete application in FORM GST RFD-02 would be issued electronically by the jurisdictional tax officer based on the documents so received from the common portal. 7.5 As per Sub-rule (3) of Rule 90 of the CGST Rules, 2017 the Deficiency Memo in FORM GST RFD-03 has to be issued within 15 days from the date of ARN, by the Proper Officer, communicating the deficiencies noticed during preliminary scrutiny of the Refund claim. 7.6 Once an acknowledgement has been issued in relation to a refund application, no Deficiency Memo, on any grounds, can be subsequently issued for the said application. 7.7 After a Deficiency Memo has been issued, the refund application would not be further processed and a fresh application will have to be filed by the applicant. The applicant is required to rectify the deficiencies highlighted in Deficiency Memo and file fresh refund application electronically in FORM GST RFD-01 again for the same period and this application would have a new and distinct ARN . (CBIC Circular No. 125/4/2019-GST dated 18.11.2019). 7.8 The time period, from the date of filing of the refund claim in FORM GST RFD-01 till the date of communication of the deficiencies in FORM GST RFD-03 by the Proper Officer, shall be excluded for computing the period of two years, as specified under Section 54(1) of CGST Act, 2017 in respect of any fresh refund claim filed by the applicant consequent to issuance of the Deficiency Memo. (Proviso to Rule 90(3) of CGST Rules, 2017) 7.9 Any amount of input tax credit/cash debited from Electronic Credit/Cash Ledger would be re-credited automatically once the Deficiency Memo has been issued. 7.10 In terms of Section 54(6) of CGST Act, 2017, the Proper Officer may grant 90% of refund of unutilized input tax credit on provisional basis, claimed on account of zero-rated supply of goods and services, subject to the conditions specified in Rule 91 of the CGST Rules, 2017. The Proper Officer shall make an order in FORM GST RFD-04 within seven days from the date of issuance of acknowledgement in FORM GST RFD-02 . 7.11 The payment order in FORM GST RFD-05 shall be issued by the Proper Officer and the same shall be credited electronically to the bank account of the applicant mentioned in the registration particulars. The payment order is required to be revalidated in case if the refund is not disbursed within the same financial year in which the payment advice was issued. 7.12 On examination if the refund application is found in order and the Proper Officer is satisfied that a refund under Section 54(5) of CGST Act, 2017, is due and payable to the applicant then he will pass an order in FORM GST RFD-06 , sanctioning the entitled amount of refund, mentioning therein the amount of refund granted on provisional basis, if any, amount adjusted against any outstanding demand and the balance amount refundable. The amount determined as refundable shall be credited to the Consumer Welfare Fund , except in cases mentioned in Section 54(8) of the CGST Act, 2017 and where it is proved that the burden of tax is not passed on to another person. Before sanction of refund the data sent by DGARM is to be checked. 7.13(a). If a registered person claims refund of any amount of tax wrongly paid or paid in excess for which debit has been made from the Electronic Credit Ledger, the said amount, if found admissible, shall be re-credited to the Electronic Credit Ledger by the Proper Officer by an order made in FORM GST PMT-03 . (Rule 86(4A) of CGST Rules, 2017) (CBIC Circular No.135/05/2020-GST dated 31.03.2020). The functionality of FORM GST PMT-03A allows Proper Officer to re-credit the amount in the Electronic Credit Ledger of the taxpayer. 7.13(b). As per Rule 86(4B) of CGST Rules, 2017, if the registered person deposits the amount in respect of the following categories of refund sanctioned erroneously, along with interest and penalty, wherever applicable, through FORM GST DRC-03 , by debiting the Electronic Cash Ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the Electronic Credit Ledger by the Proper Officer by an order made in FORM GST PMT-03A - (a) Refund of IGST obtained in contravention of Rule 96(10) of CGST Rules, 2017. (b) Refund of unutilized ITC on account of export of goods/services without payment of tax. (c) Refund of unutilized ITC on account of zero-rated supply of goods/services to SEZ developer/Unit without payment of tax. (d) Refund of unutilized ITC due to inverted tax structure. 7.14 Time limit for deciding refund claim - The order under which the refund application is decided, either rejecting or accepting refund claim, shall be issued by the Proper Officer within sixty days from the date of receipt of application complete in all respects. - Section 54(5) of CGST Act, 2017. 7.15 If any tax refundable under Section 54(5) of the CGST Act, 2017, to any applicant is not refunded within sixty days from the date of receipt of application, interest at the specified rate is payable for the period of delay beyond sixty days, from the date of receipt of such application till the date of refund of such tax. (Section 56 of CGST Act, 2017) 7.16 No refund if amount less than Rs. 1,000/- - No refund shall be paid to an applicant if the amount of refund is less than Rupees One Thousand (Section 54(14) of CGST Act, 2017). The limit of Rupees One Thousand shall be applied for each tax head separately and not cumulatively. (CBIC Circular No. 125/44/2019 - GST dated 18.11.2019). 7.17 Powers to withhold refund in certain cases - Section 54(11) of the CGST Act, 2017 provides that where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under GST Act is pending and the Proper Officer or 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 illicit activity or fraud committed, he may pass an order in Part A of FORM GST RFD-07 , providing the reasons for withholding of the refund amount. Once the reasons for withholding refund no more exist, such withheld refunds may be released by passing an order in Part-B of FORM GST RFD-07. 7.18 On examination of the refund application, if the Proper Officer is satisfied that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant then he will issue a notice in FORM GST RFD-08 to the applicant. 7.19 The applicant will file reply electronically in FORM GST RFD-09 , if he so desires, within 15 days of the receipt of said notice. The Proper Officer after considering the reply filed, will issue an order electronically in FORM GST RFD-06, sanctioning the amount of refund in whole or part or rejecting the refund claim, as the case may be. No claim can be rejected without giving applicant an opportunity. 7.20 Guidelines provided under Instruction No. 03/2022-GST dated 14.06.2022 and Instruction No. 04/2022-GST dated 28.11.2022 should be followed while examining the refund claims.