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TMI BlogRefunds under GST - IntroductionX X X X Extracts X X X X X X X X Extracts X X X X ..... The relevant date provision embodied in Section 54 of the CGST Act, 2017, provision contained in Section 77 of the CGST Act, 2017 and the requirement of submission of relevant documents as listed in Rule 89(2) of CGST Rules, 2017 is an indicator of the various situations that may necessitate a refund claim. A claim for refund may arise on account of- 1. Export of Goods or services 2. Supplies to SEZs units and developers 3. Deemed Export supplies 4. Refund of taxes on purchase made by UN or embassies etc 5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court 6. Refund of accumulated Input Tax Credit on account of inverted duty structure 7. Finalisation of provisional assessment 8. Refund of pre-deposit 9. Excess payment due to mistake 10. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India 11. Refund on account of issuance of refund vouchers for taxes paid on advances against which goods or services have not been supplied 12. Refund of CGST SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort without payment of tax by executing a Bond/LUT and claim refund of related ITC of taxes paid on inputs and input services used in making zero rated supplies. GRANT OF PROVISIONAL REFUND IN CASE OF ZERO RATED SUPPLIES GST law also provides for grant of provisional refund of 90% of the total refund claim, in case the claim relates for refund arising on account of zero rated supplies. The provisional refund would be paid within 7 days after giving the acknowledgement. The acknowledgement of refund application is normally issued within a period of 15 days. The provisional refund would not be granted to such supplier who was, during any period of five years immediately preceding the refund period, was prosecuted. PAYMENT OF WRONG TAX Under GST it might happen that the taxable person may pay integrated tax instead of central tax plus state tax and vice versa because of incorrect application of the place of supply provisions. In such cases, while making the appropriate payment of tax, interest will not be charged and the refund claim of the wrong tax paid earlier will be entertained without subjecting it to the provision of unjust enrichment. CLAIM BY A PERSON WHO HAS BORNE THE INCIDE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... borne by the consumer. It is for this reason that every claim of refund (barring specified exceptions) need to pass the test of unjust enrichment. And every such claim if sanctioned is first transferred to the Consumer Welfare Fund. The GST law makes this test inapplicable in case of refund of accumulated ITC, refund on account of exports, refund of payment of wrong tax (integrated tax instead of central tax plus state tax and vice versa), refund of tax paid on a supply which is not provided or which refund voucher is issued or if the applicant shows that he has not passed on the incidence of tax to any other person. In all other cases the test of unjust enrichment needs to be satisfied for the claim to be paid to the applicant. For crossing the bar of unjust enrichment, if the refund claim is less than ₹ 2 Lakhs, then a self-declaration of the applicant to the effect that the incidence of tax has not been passed to any other person will suffice to process the refund claim. For refund claims exceeding ₹ 2 Lakhs, a certificate from a Chartered Accountant/Cost Accountant will have to be given. STANDARDISATION OF PROCEDURE The GST laws makes standardised provisions for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. If the claim is for refund of accumulated ITC, only a statement containing invoice details as prescribed in the refund chapter of the CGST Rules, 2017 need to be given. In case of claim of refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should also be given. For crossing the bar of unjust enrichment, if the refund claim is less than ₹ 2 Lakhs, then a self-declaration by the applicant to the effect that the incidence of tax has not been passed to any other person will suffice to process the refund claim. For refund claims exceeding ₹ 2 Lakhs, a certificate from a Chartered Accountant/Cost Accountant will have to be given. COMPLIANCE WITH NATURAL JUSTICE In case the claim is sought to be rejected by the proper officer, a notice has to be given online to the applicant stating the ground on which the refund is sought to be rejected. The applicant needs to respond online within 15 days from the receipt of such notice. Thus no claim can be rejected without putting the applicant to notice. PAYMENT TO BE CREDITED ONLINE The refund claim, wherever due, will be directly credited to the bank ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng period. It may be noted that Rule 96(9) has been inserted, w.e.f. 23.10.2017, in CGST Rules, 2017 vide Notification no. 75/2017-Central Tax dated 29.12.2017 so as to provide that the refund of integrated tax paid on export of goods or services is not permitted to such persons who have received supplies on which the supplier has availed the benefit of Notification no. 48/2017-Central Tax dated 18.10.2017 or Notification no. 40/2017- Central Tax(Rate) dated 23.10.2017 or Notification No. 41/2017-Integrated Tax(Rate) dated 23.10.2017. Manual filing of Refund Claims Rule 97A has been inserted in the CGST Rules, 2017 vide Notification no. 55/2017-Central Tax dated 15.11.2017 to enable manual processing of refund claims. The said rule provides that any reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as appended to CGST Rules, 2017. Circular no. 17/17/2017-GST dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax and the Commissioner of State Tax. In case such an order has not been issued in the State, the registered person is at liberty to apply for refund before the Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, in the latter case, an undertaking is required to be submitted stating that the claim for sanction of refund has been made to only one of the authorities. It is reiterated that the Central Tax officers shall facilitate the processing of the refund claims of all registered persons whether or not such person was registered with the Central Government in the earlier regime. Modalities/Records in respect of manual refund claims The Circular no.17/17/2017-GST dated 15.11.2017 read with Circular no. 24/24/2017-GST dated 21.12.2017 lays down the modalities for maintenance of records in respect of such manual refund claims, which needs to be adhered to scrupulously. The time limits laid down in the Act need to be followed and the prescribed forms need to be generated manually for processing of such refund claims Manual filing and processing of refund claims on account of invert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. However, the registered persons applying for refund is required to give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements of clause (c) of sub-section 16(2) read with section 42(2) of the CGST Act, 2017 have not been complied with in respect of the amount refunded. This undertaking should be submitted manually along with the refund claim till the same is available in FORM RFD-01A on the common portal. Further the prescribed statements - Statement 1 and Statement 1A of FORM GST RFD-01A are also required to be filled. It may be noted that Rule 89(4B) has been inserted, i.e. 23.10.2017, in CGST Rules, 2017 vide Notification no. 75/2017-Central Tax dated 29.12.2017 so as to provide that refund of input tax credit, availed only in respect of inputs availed in respect of inputs received under Notification no. 40/2017-Central Tax (Rate) dated 23.10.2017 or Notification no. 41/2017-Integrated Tax (Rate) dated 23.10.2017, or both or other inputs or input services used in making such exports shall be granted. Manual Claims in respect of Deemed Exports The Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund is rejected under rule 92 of the CGST Rules, 2017, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST RFD-1B until the FORM GST PMT-03 is available on the common portal. Further, the payment of the sanctioned refund amount shall be made only by the respective tax authority of the Central or State Government. Thus, the refund order issued either by the Central tax authority or the State tax/UT tax authority shall be communicated to the concerned counter-part tax authority within seven working days for the purpose of payment of the relevant sanctioned refund amount of tax or cess, as the case may be. This time limit of seven working days is also applicable to refund claims in respect of zero-rated supplies being processed as per Circular No. 17/17/2017-GST dated 15.11.2017. It must be ensured that the timelines specified under section 54(7) and rule 91(2) of the CGST Rules, 2017 for the sanction of refund are adhered to. Special Procedure to facilitate smooth refund of Central Tax and State Tax In order to facilitate sanction of refund amount of Central tax and State tax by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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