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TMI BlogFully electronic refund process through FORM GST RFD-01 and single disbursement.X X X X Extracts X X X X X X X X Extracts X X X X ..... mission of the refund application electronic, Trade Circular No. 57/2018 dated 31.12.2018 was issued wherein it was specified that the refund application in FORM GST RFD-01A , along with all supporting documents, shall be submitted electronically. However, various post submission stages of processing of the refund application continued to be manual. 2. The necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26.09.2019 . Accordingly, the Trade Circulars issued earlier laying down the guidelines for manual submission and processing of refund claims need to be suitably modified and a fresh set of guidelines needs to be issued for electronic submission and processing of refund claims. With this objective and in order to ensure uniformity in the implementation of the provisions of law across field formations, the Commissioner, in exercise of its powers conferred by section 168 of the West Bengal Goods and Services Tax Act, 2017 (hereinafter referred to as WBGST Act ), hereby lays down the procedure for electronic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim. A comprehensive list of such documents is provided at Annexure-A and it is clarified that no other document needs to be provided by the applicant at the stage of filing of the refund application. The facility of uploading these other documents/invoices shall be available on the common portal where four documents, each of maximum 5MB, may be uploaded along with the refund application. Neither the refund application in FORM GST RFD-01 nor any of the supporting documents shall be required to be physically submitted to the office of the jurisdictional proper officer. b. 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 supporting documents/ undertaking/ statements/invoices and, where required, the amount has been debited from the electronic credit/cash ledger. c. As soon as the ARN is generated, the refund application along with all the supporting documents shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy memo gets issued for the refund application submitted by him, then the re-submitted refund application, after correction of deficiencies, shall be treated as a fresh refund application and shall be forwarded to the jurisdictional proper officer of the tax authority to which the taxpayer has now been assigned, irrespective of which authority handled the initial refund claim and issued the deficiency memo. 6. Any refund claim for a tax period may be filed only after furnishing all the returns in FORM GSTR-1 and FORM GSTR-3B which were due to be furnished on or before the date on which the refund application is being filed. However, in case of a claim for refund filed by a composition taxpayer, a non-resident taxable person, or an Input Service Distributor (ISD) furnishing of returns in FORM GSTR-1 and FORM GSTR-3B is not required. Instead, the applicant should have furnished returns in FORM GSTR-4 (along with FORM GST CMP-08) , FORM GSTR-5 or FORM GSTR-6 , as the case may be, which were due to be furnished on or before the date on which the refund application is being filed. 7. Since the functionality of furnishing of FORM GSTR-2 and FORM GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... knowledgement has been issued in relation to a refund application, no deficiency memo, on any grounds, may be subsequently issued for the said application. 10. After a deficiency memo has been issued, the refund application would not be further processed and a fresh application would have to be filed. 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. It may be noted that the re-credit would take place automatically and no order in FORM GST PMT-03 is required to be issued. 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. 11. It is further clarified that once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with respect to the application for the same period, unless the deficiencies pointed out in the original deficiency memo remain un-rectified, either wholly or partly, or any other subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is electronically credited to his bank account. However, on detailed examination, it appears to the proper officer that only an amount of ₹ 70 is admissible as refund to the applicant. In such cases, the proper officer shall have to issue a show cause notice to the applicant, in FORM GST RFD-08 , under section 54 of the WBGST Act, read with section 73 or 74 of the WBGST Act, requiring the applicant to show cause as to why: (a) the amount claimed of ₹ 30/- should not be rejected as per the relevant provisions of the law; and (b) the amount of ₹ 20/- erroneously refunded should not be recovered under section 73 or section 74 of the WBGST Act, as the case may be, along with interest and penalty, if any. 16. The proper officer for adjudicating the above case shall be the same as the proper officer for sanctioning refund under section 54 of the WBGST Act. The above notice shall be adjudicated following the principles of natural justice and an order shall be issued, in FORM GST RFD-06, under section 54 of the WBGST Act, read with section 73 or section 74 of the WBGST Act, as the case may be. If the adjudicating authority decid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n FORM GSTR-3B has been provided. Therefore, in case of discrepancies between the data furnished by the taxpayer in FORM GSTR-3B and FORM GSTR-1 , the proper officer shall refer to the said Circular and process the refund application accordingly. 19. Detailed guidelines laid down in subsequent paragraphs of this Trade Circular covering various types of refund claims may also be followed while scrutinizing refund claims for completeness and eligibility. Re-crediting of electronic credit ledger on account of rejection of refund claim 20. In case of rejection of refund claim of unutilized/accumulated ITC due to ineligibility of the input tax credit under any provisions of the WBGST Act and rules made thereunder, the proper officer shall have to issue a show cause notice in FORM GST RFD-08 , under section 54 of the WBGST Act, read with section 73 or 74 of the WBGST Act, requiring the applicant to show cause as to why: (a) the refund amount corresponding to the ineligible ITC should not be rejected as per the relevant provisions of the law; and (b) the amount of ineligible ITC should not be recovered as wrongly availed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the law and why the ineligible ITC of ₹ 15/- should not be recovered under section 73 or section 74, as the case may be, with interest and penalty, if any. If the said notice is decided against the applicant, ₹ 15/-, along with interest and penalty, if any, shall be entered by the officer in the electronic liability register of the applicant through issuance of FORM GST DRC-07. Further, ₹ 20/- would be re-credited through FORM GST PMT-03 only after the receipt of an undertaking from the applicant to the effect that he shall not file an appeal or in case he files an appeal, the same is finally decided against the applicant. 24. Continuing with the above example, further assume that the applicant files an appeal against this order and the appellate authority decides wholly in the applicant‟s favour. It is hereby clarified in such a case the petitioner would file a fresh refund claim for the said amount of ₹ 20/- under the option of claiming refund On Account of Assessment/Provisional Assessment/Appeal/Any other order . Application for refund of integrated tax paid on export of services and supplies made to a Special Ec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplications assigned to a State/UT tax officer, both the sanction order (FORM GST RFD-04/06) and the corresponding payment order (FORM GST RFD-05) for the sanctioned refund amount, under all tax heads, shall be issued by the State/UT tax officer only. 28. The sanctioned refund amounts, as entered in the payment orders issued by the Central and State/UT tax officers, shall be disbursed through the Public Financial Management System (PFMS) of the Controller General of Accounts (CGA), Ministry of Finance, Government of India. On filing of a refund application in FORM GST RFD-01 , the common portal shall generate a master file for the applicant containing the relevant details like name, GSTIN, bank account details etc. This master file shall be shared with PFMS for validation of the bank account details provided by the applicant in the refund application. Once the bank account is validated, PFMS will create a unique assessee code (combination of GSTIN + validated bank account number) for the applicant. This unique assessee code will be used by PFMS for all refund payments made to the applicant in the said bank account. Therefore, in order to avoid repeat validations an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original ARN or the sanction order number or the amount for which the payment order was originally issued. 32. It may be noted that the applicant, at the time of filing of refund application in FORM GST RFD-01 , can select a bank account only from the list of bank accounts provided by him at the time of registration in FORM GST REG-01, or subsequently through filing a non-core amendment in FORM GST REG-14 . The same account details will be auto-populated in the payment order issued in FORM GST RFD-05 . Any change in these auto-populated bank account details shall not be allowed unless there is a validation error in relation to the same. 33. The disbursement status of the refund amount would be communicated by PFMS to the common portal. The common portal shall notify the same to the taxpayer by email/SMS. Such details shall also be available on the status tracking facility on the dashboard. 34. Section 56 of the WBGST Act clearly states that if any tax ordered to be refunded is not refunded within 60 days of the date of receipt of application, interest at the rate of 6 per cent (notified vide notification No. 1153-F.T. dated 28.06.2017) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of which input tax credit has been availed during the relevant period for which the refund is being claimed, in the format enclosed as Annexure-B along with the application for refund claim. Such availment of ITC will be subject to restriction imposed under sub-rule (4) in rule 36 of the WBGST rules inserted vide Notification No. 1730-F.T. dated 16.10.2019. The applicant shall also declare the eligibility or otherwise of the input tax credit availed against the invoices related to the claim period in the said format for enabling the proper officer to determine the same. Self-certified copies of invoices in relation to which the refund of ITC is being claimed and which are declared as eligible for ITC in Annexure B , but which are not populated in FORM GSTR-2A, shall be uploaded by the applicant along with the application in FORM GST RFD 01 . It is emphasized that the proper officer shall not insist on the submission of an invoice (either original or duplicate) the details of which are available in FORM GSTR-2A of the relevant period uploaded by the applicant. 37. In case of refunds pertaining to items listed at (a), (c) and (e) in para 3 above, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back in respect of Integrated tax. It is clarified that if a supplier avails of drawback in respect of duties rebated under the Customs and Central Excise Duties Drawback Rules, 2017, he shall be eligible for refund of unutilized input tax credit of Central tax/ State tax/ Union Territory tax / Integrated tax/ Compensation cess. It is also clarified that refund of eligible credit on account of State tax shall be available if the supplier of goods or services or both has availed of drawback in respect of Central tax/Integrated tax. Guidelines for refund of tax paid on deemed exports 41. Certain supplies of goods have been notified as deemed exports vide notification No. 48/2017-Central Tax dated 18.10.2017 under section 147 of the WBGST Act. Further, the third proviso to rule 89(1) of the WBGST Rules allows either the recipient or the supplier to apply for refund of tax paid on such deemed export supplies. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in notification No. 1854-F.T. dated 18.10.2017 are also required to be furnished which includes an undertaking that the recipient of deemed exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the compensation cess paid on coal for payment of Integrated tax in view of the proviso to section 11(2) of the Cess Act, which allows the utilization of the input tax credit of cess, only for the payment of cess on the outward supplies. 43. As regards the certain issues related to refund of accumulated input tax credit of compensation cess on account of zero-rated supplies made under Bond/Letter of Undertaking on which clarifications have been sought since GST roll out, the same have been examined and are clarified as below: a) Issue: A registered person uses inputs on which compensation cess is leviable (e.g. coal) to export goods on which there is no levy of compensation cess (e.g. aluminium). For the period July, 2017 to May, 2018, no ITC is availed of the compensation cess paid on the inputs received during this period. ITC is only availed of the Central tax, State tax/Union Territory tax or Integrated tax charged on the invoices for these inputs. This ITC is utilized for payment of Integrated tax on export of goods. Vide Trade Circular No. 33/2018-GST 17.09.2018, it was clarified that refund of accumulated ITC of compensation cess on account of zer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between intermediate goods or services and final goods or services under GST. Inputs have been clearly defined to include any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. Since coal is an input used in the production of aluminium, albeit indirectly through the captive generation of electricity, which is directly connected with the business of the registered person, input tax credit in relation to the same cannot be denied. c) Issue: A registered person avails ITC of compensation cess (say, of ₹ 100/-) paid on purchases of coal every month. At the same time, he reverses a certain proportion (say, half i.e. ₹ 50/-) of the ITC of compensation cess so availed on purchases of coal which are used in making zero rated outward supplies. Both these details are entered in the FORM GSTR-3B filed for the month as a result of which an amount of ₹ 50/- only is credited in the electronic credit ledger. The reversed amount (₹ 50/-) is then shown as a 'cost' in the books of accounts of the registered person. However, the registered person declares ₹ 100/- as 'Net ITC' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of the relevant provisions have been made. The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case. 45. Rule 96A (1) of the WBGST Rules provides that any registered person may export goods or services without payment of Integrated tax after furnishing a LUT / bond and that he would be liable to pay the tax due along with the interest as applicable within a period of fifteen days after the expiry of three months or such further period as may be allowed by the Commissioner from the date of issue of the invoice for export, if the goods are not exported out of India. The time period in case of services is fifteen days after the expiry of one year or such further period as may be allowed by the Commissioner from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange. It has been reported that the exporters have been asked to pay Integrated tax where the goods have been exported but not within three months from the date of the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the WBGST Act read with the rules made thereunder. The same transaction value should normally be recorded in the corresponding shipping bill / bill of export. During the processing of the refund claim, the value of the goods declared in the GST invoice and the value in the corresponding shipping bill / bill of export should be examined and the lower of the two values should be taken into account while calculating the eligible amount of refund. 48. It is clarified that the realization of consideration in convertible foreign exchange, or in Indian rupees wherever permitted by Reserve Bank of India, is one of the conditions for export of services. In case of export of goods, realization of consideration is not a pre-condition. In rule 89 (2) of the WBGST Rules, a statement containing the number and date of invoices and the relevant Bank Realization Certificates (BRC) or Foreign Inward Remittance Certificates (FIRC) is required in case of export of services whereas, in case of export of goods, a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices is required to be submitted along with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been availed during the relevant period and thus, cannot be treated as part of Net ITC‟ and thus no refund of such unutilized transitional credit is admissible. Restrictions imposed by sub-rule (10) of rule 96 of the WBGST Rules 51. Sub-rule (10) of rule 96 of the WBGST Rules, restricted exporters from availing the facility of claiming refund of Integrated tax paid on exports in certain scenarios. It was intended that exporters availing benefit of certain notifications would not be eligible to avail the facility of such refund. However, representations were received requesting that exporters who have received capital goods under the Export Promotion Capital Goods Scheme (hereinafter referred to as EPCG Scheme ), should be allowed to avail the facility of claiming refund of the Integrated tax paid on exports. GST Council, in its 30th meeting held in New Delhi on 28th September, 2018, accorded approval to the proposal of suitably amending the said sub-rule along with sub-rule (4B) of rule 89 of the WBGST Rules prospectively in order to enable such exporters to avail the said facility. Notification No. 1506-F.T. dated the 12th October, 2018 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed ITC on account of inverted tax structure, some of the tax authorities denied the refund of ITC of GST paid on those inputs which are procured at equal or lower rate of GST than the rate of GST on outward supply, by not including the amount of such ITC while calculating the maximum refund amount as specified in rule 89(5) of the WBGST Rules. The matter has been examined and the following issues are clarified: a) Refund of unutilized ITC in case of inverted tax structure, as provided in section 54(3) of the WBGST Act, is available where ITC remains unutilized even after setting off of available ITC for the payment of output tax liability. Where there are multiple inputs attracting different rates of tax, in the formula provided in rule 89(5) of the WBGST Rules, the term Net ITC‟ covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax. b) The calculation of refund of accumulated ITC on account of inverted tax structure, in cases where several inputs are used in supplying the final product/output, can be clearly understood with the help of following example: i. Suppose a manufacturing process involves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax deductor or the collector as the excess balance in electronic cash ledger. In this case, the common portal would debit the amount so claimed as refund. However, in case where tax deducted or collected in excess is also paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8 , as the case may be, and the said amount has been credited to the electronic cash ledger of the deductee, the deductee can adjust the same while discharging his output liability or he can claim refund of the same under the category refund of excess balance in the electronic cash ledger . Debit of electronic credit ledger using FORM GST DRC-03 57. Various representations have been received seeking clarifications on certain refund related issues, the solutions to which involve debiting the electronic credit ledger using FORM GST DRC-03 . These issues are clarified as under: Sl. No. Issue Clarification 1 Certain registered persons have reversed, through return in FORM GSTR-3B filed for the month of August, 2018 or for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund, he shall request the taxpayer, in writing, to debit the said amount from his electronic credit ledger through FORM GST DRC-03 . Once the proof of such debit is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD06 and the payment order in FORM GST RFD-05 . (c) All refund applications for unutilized ITC on account of accumulation due to inverted tax structure for subsequent tax period(s) shall be filed in FORM GST RFD-01 under the category refund of unutilized ITC on account of accumulation due to inverted tax structure . 2 The clarification at Sl. No. 1 above applies to registered persons who have already reversed the ITC required to be lapsed in terms of the said notification through return in FORM GSTR-3B . What about those registered persons who are yet to perform this reversal? It is hereby clarified that all those registered persons required to make the reversal in terms of the said notification and who have not yet done so, may reverse the said amount through FORM GST DRC-03 instead of through FORM GSTR-3B . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provides that where the person claiming refund of unutilized input tax credit on account of zero-rated supplies without payment of tax has received supplies on which the supplier has availed the benefit of the said notifications, the refund of input tax credit, availed in respect of such inputs received under the said notifications for export of goods, shall be granted. b) This refund of accumulated ITC under rule 89(4B) of the WBGST Rules shall be applied under the category any other instead of under the category refund of unutilized ITC on account of exports without payment of tax in FORM GST RFD-01 and shall be accompanied by all supporting documents required for substantiating the refund claim under the category refund of unutilized ITC on account of exports without payment of tax . After scrutinizing the application for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable as refund, he shall request the taxpayer, in writing, to debit the said amount from his electronic credit ledger through FORM GST DRC-03 . Once the proof of such debit is received by the proper officer, he shall pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -section (14) of section 54 of the WBGST Act provides that no refund under subsection (5) or sub-section (6) of section 54 of the WBGST Act shall be paid to an applicant, if the amount is less than one thousand rupees. In this regard, it is clarified that the limit of rupees one thousand shall be applied for each tax head separately and not cumulatively. 61. Presently, ITC is reflected in the electronic credit ledger on the basis of the amount of the ITC availed on self-declaration basis in FORM GSTR-3B for a particular tax period. It may happen that the goods purchased against a particular tax invoice issued in a particular month, say August 2018, may be declared in the FORM GSTR-3B filed for a subsequent month, say September 2018. This is inevitable in cases where the supplier raises an invoice, say in August, 2018, and the goods reach the recipient‟s premises in September, 2018. Since GST law mandates that ITC can be availed only after the goods have been received, the recipient can only avail the ITC on such goods in the FORM GSTR-3B filed for the month of September, 2018. However, it has been reported that tax authorities are excluding such invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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