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TMI BlogFully electronic refund process through FORM GST RFD-01 and single disbursementX X X X Extracts X X X X X X X X Extracts X X X X ..... ng done manually. In order to make the process of submission of the refund application electronic, Circular No.4/2019 GST, Dated 24.01.2019 (Central Circular No. 79/53/2018-GST 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 2 6.09.2019. Accordingly, the 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 Chief Commissioner, in exercise of his powers conferred by section 168 (1) of the Andhra Pradesh Goods and Ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing modalities shall be followed for all refund applications filed in FORM GST RFD-01 on the common portal with effect from 2 6.09.2019: a. FORM GST RFD-01 shall be filled on the common portal by an applicant seeking refund under any of the categories mentioned above. This shall entail filing of statements/declarations/undertakings which are part of FORM GST RFD-01 itself, 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these applications up to the stage of issuance of final order in FORM GST RFD-06 and the related payment order in FORM GST RFD-05 even if the applicant is assigned to the counterpart tax authority while the refund claim is under processing. However, if such an applicant gets assigned to one of the tax authorities after generation of the ARN and a deficiency 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 no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules provides for communication of deficiencies in FORM GST RFD-03 where deficiencies are noticed within the aforesaid period of 15 days. It is clarified that either an acknowledgement or a deficiency memo should be issued within the aforesaid period of 15 days starting from the date of generation of ARN. Once an acknowledgement 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 appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RFD-04. For example, consider a situation where an applicant files a refund claim of ₹ 100/- on account of zero-rated supplies. The proper officer, after prima-facie examination of the application, sanctions ₹ 90 as provisional refund through FORM GST RFD-04 and the 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 APGST Act, read with section 73 o r 74 of the APGST 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 APGST 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 APGST Act. The abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent tax periods should also be taken into cognizance, wherever applicable. In this regard, Central Circular No. 26/26/2017 GST dated 29.12.2017 may be referred, wherein the procedure for rectification of errors made while filing the returns in 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 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 APGST 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 APGST Act, read with section 73 or 74 of the APGST Act, requiring the applicant to show cause as to why: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, in FORM GST RFD-08 shall have to be issued to the applicant, requiring him to show cause as to why the refund claim amounting to ₹ 20/-should not be rejected under the relevant provisions 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 Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (FORM GST RFD-05) for the sanctioned refund amount, under all tax heads, shall be issued by the Central tax officer only. Similarly, for refund applications 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 wil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number and shall contain the newly selected bank account details. However, there will be no change in either the 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 APGST Act clearly states that if any tax ordered to be refunded is not refunded within 60 days of the date of receipt of application, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the corresponding supplier(s) in relation to which the input tax credit has been availed by the applicant. Such applicants shall also upload the details of all the invoices on the 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 APGST rules inserted vide Notification issued in the G.O.Ms.No.140, Revenue (Commercial Taxes-II) Department, Dated 21.11.2019/Central Notification No. 49/2019-CT dated 09.10.2019. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able in the electronic credit ledger. 40. The third proviso to sub-section (3) of section 54 of the APGST Act states that no refund of input tax credit shall be allowed in cases where the supplier of goods or services or both avails of drawback in respect of Central 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. Guidelines for refund of tax paid on deemed exports 41. Certain supplies of goods have been notified as deemed exports vide notification issued in the G.O.Ms.No.496, Revenue (Commercial Taxes-II) Department, Dated 03.11.2017/Central Notification No. 48/2017-Central Tax dated 18.10.2017 under section 147 of the APGST Act. Further, the third proviso to rule 89(1) of the APGST Rules allows either the recipient o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation Cess may be availed for making zero-rated supplies. Further, by virtue of section 54(3) of the APGST Act, the refund of such unutilized ITC shall be available. Accordingly, it is clarified that a registered person making zero rated supply of aluminium products under bond or LUT may claim refund of unutilized credit including that of compensation cess paid on coal. Such registered persons may also make zero-rated supply of aluminium products on payment of Integrated tax but they cannot utilize the credit of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted under Bond/Letter of Undertaking without payment of duty. Refund claim is filed for accumulated Input Tax Credit of compensation cess paid on coal. Can the said refund claim be rejected on the ground that coal is used for the generation of electricity which is an intermediate product and not the final product which is exported and since electricity is exempt from GST, the ITC of the tax paid on coal for generation of electricity is not available? Clarification: There is no distinction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner before effecting zero rated supplies. A detailed procedure for filing of LUT has been specified vide Cental Circular No. 8/8/2017 GST dated 4.10.2017. It has been brought to the notice of the Chief Commissioner that in some cases, such zero-rated supplies were made before filing the LUT and refund claims for unutilized input tax credit got filed. In this regard, it is emphasized that the substantive benefits of zero rating may not be denied where it has been established that exports 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 APGST 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 Chief Commissioner from the date of issue of the invoice for export, if the good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax invoice is different from the export value declared in the corresponding shipping bill under the Customs Act, refund claims are not being processed. The matter has been examined and it is clarified that the zero-rated supply of goods is effected under the provisions of the GST laws. An exporter, at the time of supply of goods declares that the goods are meant for export and the same is done under an invoice issued under rule 46 of the APGST Rules. The value recorded in the GST invoice should normally be the transaction value as determined under section 15 of the APGST 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scenarios is to be calculated using the formulae given in the said sub-rules. The formulae use the phrase Net ITC and defines the same as input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both . It is clarified that as the transitional credit pertains to duties and taxes paid under the existing laws viz., under Central Excise Act, 1944 and Chapter V of the Finance Act, 1994, the same cannot be said 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 APGST Rules 51. Sub-rule (10) of rule 96 of the APGST 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 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in sub-rule (10) of rule 96 of the APGST Rules. Clarification on calculation of refund amount for claims of refund of accumulated ITC on account of inverted tax structure 53. Sub-section (3) of section 54 of the APGST Act provides that refund of any unutilized ITC may be claimed where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies). Further, sub- section (59) of section 2 of the APGST Act defines inputs as any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business. Thus, inputs do not include services or capital goods. Therefore, clearly, the intent of the law is not to allow refund of tax paid on input services or capital goods as part of refund of unutilized input tax credit. It is clarified that both the law and the related rules clearly prevent the refund of tax paid on input services and capital goods as part of refund of input tax credit accumulated on account of inverted tax structure. 54. There have been instances where while processing the refund of unutilized ITC on acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r will give the figure of ₹ 385/-. vi. From this, if we deduct the tax payable on such inverted rated supply of goods or services, which is ₹ 360/-, we get the maximum refund amount, as per rule 89(5) of the APGST Rules which is ₹ 25/-. Refund of TDS/TCS deposited in excess 55. Tax deducted in accordance with the provisions of section 51 of the APGST Act or tax collected in accordance with the provisions of section 52 of the APGST Act is required to be paid while discharging the liability in FORM GSTR 7 or FORM GSTR 8, as the case may be, by the deductor or the collector, as the case may be. 56. It has been reported that, there are instances where taxes so deducted or collected is deposited under the wrong head (e.g. an amount deducted as Central tax is deposited as Integrated tax/State tax), thereby creating excess balance in the cash ledger of the deductor or the collector as the case may be. Doubts have been raised on the fate of this excess balance of TDS/TCS in the cash ledger of the deductor or the collector. It is clarified that such excess balance may be claimed by the tax deductor or the collector as the excess balanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) As a one-time measure to resolve this issue, refund of accumulated ITC on account of inverted tax structure, for the period(s) in which there is reversal of the ITC required to be lapsed in terms of the said notification, is to be claimed under the category any other instead of under the category refund of unutilized ITC on account of accumulation due to inverted tax structure in FORM GST RFD-01A . It is emphasized that this application for refund should relate to the same tax period in which such reversal has been made. b) The application shall be accompanied by all statements, declarations, undertakings and other documents which are statutorily required to be submitted with a refund claim of unutilized ITC on account of accumulation due to inverted tax structure . On receiving the said application, the proper officer shall himself calculate the refund amount admissible as per rule 89(5) of Andhra Pradesh Goods and Services Tax Rules, 2017 (hereinafter referred to as APGST Rules ), in the manner detailed in para 37 above. After calculating the admissible refund amount, as described above, and scrutinizing the application for completeness and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) The registered person who has reversed the amount of credit to be lapsed in the return in FORM GSTR-3B for any month subsequent to August, 2018 or through FORM GST DRC-03 subsequent to the due date of filing of the return in FORM GSTR-3B for the month of August, 2018 would remain eligible to claim refund of unutilized ITC on account of accumulation due to inverted tax structure w.e.f. 01.08.2018. However, such refund shall be granted only after the reversal of the amount of credit to be lapsed, either through FORM GSTR-3B or FORM GST DRC-03, along with payment of interest, as applicable. 4 How should a merchant exporter claim refund of input tax credit availed on supplies received on which the supplier has availed the benefit of the Notification issued in the G.O.Ms.No.597, Revenue (Commercial Taxes-II) Department, Dated 12.12.2017/Central Notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the relevant information regarding the refund claim is forwarded to Customs Systems. Upon receipt of the information from the common portal regarding furnishing of these details, the Customs Systems processes the claim for refund and an amount equal to the Integrated tax paid in respect of such export is electronically credited to the bank account of the applicant. Clarifications on other issues 59. Notification issued in the G.O.Ms.No.597, Revenue (Commercial Taxes-II) Department, Dated 12.12.2017/Central Notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017 and notification No. 41/2017 Integrated Tax (Rate), Dated 23.10.2017 provide for supplies for exports at a concessional rate of 0.05% and 0.1% respectively, subject to certain conditions specified in the said notifications. It is clarified that the benefit of supplies at concessional rate is subject to certain conditions and the said benefit is optional. The option may or may not be availed by the supplier and / or the recipient and the goods may be procured at the normal applicable tax rate. It is also clarified that the exporter will be eligible to take credit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of September following the financial year to which the invoice pertains or the date of filing of annual return, whichever is earlier. Therefore, the input tax credit of invoices issued in August, 2019, availed in September, 2019 cannot be excluded from the calculation of the refund amount for the month of September, 2019. 62. It has been represented that on certain occasions, departmental officers do not consider ITC on stores and spares, packing materials, materials purchased for machinery repairs, printing and stationery items, as part of Net ITC on the grounds that these are not directly consumed in the manufacturing process and therefore, do not qualify as input. There are also instances where stores and spares charged to revenue are considered as capital goods and therefore the ITC availed on them is not included in Net ITC, even though the value of these goods has not been capitalized in his books of account by the applicant. It is clarified that the ITC of the GST paid on inputs, including inward supplies of stores and spares, packing materials etc., shall be available as ITC as long as these inputs are used for the purpose of the business and/or for effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod Statement 2 under rule 89(2)(c) Statement of invoices (Annexure-B) Self-certified copies of invoices entered inAnnexure-A whose details are not found in GSTR-2A of the relevant period Self-declaration regarding non-prosecution under sub-rule (1) of rule 91 of the CGST Rules for availing provisional refund 3 Refund of unutilized ITC on account of Supplies made to SEZ units/develop er without payment of tax Declaration under third proviso to section 54(3) Copy of GSTR-2A of the relevant period Statement 5 under rule 89(2)(d) and rule 89(2)(e) Statement of invoices (Annexure-B) Statement 5A under rule 89(4) Self-certified copies of invoices entered inAnnexure-B whose details are not found in GSTR-2A of the relevant period Declaration under rule 89(2)(f) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under rule 89(2)(h) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise 6 Refund to supplier of tax paid on deemed export supplies Statement 5(B) under rule 89(2)(g) Documents required under Notification issued in the G.O.Ms.No 497, Revenue (Commercial Taxes-II) Department, Dated 03.11.2017/Central Notification No. 49/2017-Central Tax dated 18.10.2017 and Circular No. 6, Dated 02.01.2018/Central Circular No.14/14/2017-GST dated 06.11.2017 Declaration under rule 89(2)(g) Undertaking in relation to sections 16(2)(c) and section 42(2) Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise 7 Refund to recipient of tax paid on deemed export supplies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Self-declaration under rule 89(2)(l) if amount claimed does not exceed two lakh rupees, certification under rule 89(2)(m) otherwise Annexure-B Statement of invoices to be submitted with application for refund of unutilized ITC Sr. No. GSTIN of the Supplier Name of the Supplier Invoice Details Type Central Tax State Tax / Union Territory Tax Inte-grated Tax Cess Eligible for ITC Amount of eligible ITC Whether invoices included in GSTR-2A Y/N Invoice No. Date Value ..... X X X X Extracts X X X X X X X X Extracts X X X X
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