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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 ..... 019 dated 08.01.2019 was issued by the undersigned 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 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, in exercise of its powers conferred by section 168 of the Rajasthan Goods and Services Tax Act, 2017 (hereinafter referred to as RGST Act ), hereby lays down the procedure for electronic submission and processing of refund applications in supersession of earlier Cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 transferred electronically to the jurisdictional proper officer who shall be able to view it on the system. The application shall be deemed to have been filed under sub-rule (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 GSTR-3 remains unimplemented, it has been decided by the GST Council to sanction refund of provisionally accepted input tax credit. However, the applicants applying for refund must give an undertaking to the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 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 substantive deficiency is noticed subsequently. 12. It is also clarified that since a refund application filed after correction of deficiency is treated as a fresh refund application, such a rectified refund application, submitted aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice to the applicant, in FORM GST RFD-08 , under section 54 of the RGST Act, read with section 73 or 74 of the RGST 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 RGST 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 RGST 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 RGST Act, read with section 73 or section 74 of the RGST Act, as the case may be. If the adjudicating authority decides against the applicant in respect of both points (a) and (b) above, then an amount of ₹ 70/- will have to be sanctioned in FORM GST RFD- 06 , and an amount of ₹ 20/-, along with interest and penalty, if any, shall be entered by the officer in the electronic liability reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 RGST 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 RGST Act, read with section 73 or 74 of the RGST 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 ITC under section 73 or section 74 of the RGST Act, as the case may be, along with interest and penalty, if any. 21. 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 RGST Act, read with section 73 or section 74 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Economic Zone developer or a Special Economic Zone unit 25. It has been represented that while filing the return in FORM GSTR-3B for a given tax period, certain registered persons committed errors in declaring the export of services on payment of integrated tax or zero-rated supplies made to a Special Economic Zone developer or a Special Economic Zone u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsed 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 and generation of multiple unique assessee codes for the same GSTIN, it shall be advisable for the applicants to enter the same bank account details in successive refund applications submitted in FORM GST RFD-01 . In cases where an applicant wishes to avail the refund in a different bank account, which has not yet been validated, a new unique assessee code (comprising of GSTIN + new bank account) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G-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 RGST 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. F.12(56)FD/Tax/2017-Pt-I-39 dated 29.06.2017) on the refund amount starting from the date immediately after the expiry of sixty days from the date of receipt of application (ARN) till the date of refund of such tax shall have to be paid to the applicant. It may be noted that any tax shall be considered to have been refunded only when the amount has been credited to the bank account of the applicant. Therefore, interest will be calculated starting from the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility 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 common portal calculates the refundable amount as the least of the following amounts: (a) The maximum refund amount as per the formula in rule 89(4) or rule 89(5) of the RGST Rules [formula is applied on the consolidated amount of ITC, i.e. Central tax + State tax +Integrated tax]; (b) The balance in the electronic credit ledger of the applicant at the end of the tax period for which the refund claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax. Guidelines for refund of tax paid on deemed exports 41. Certain supplies of goods have been notified as deemed exports vide notification No. F.12(46)FD/Tax/2017-Pt-II-122 dated 18.10.2017 under section 147 of the RGST Act. Further, the third proviso to rule 89(1) of the RGST 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. F.12(46)FD/Tax/2017-Pt-II-123 dated 18.10.2017 are also required to be furnished which includes an undertaking that the recipient of deemed export supplies shall not claim the refund in respect of such supplies and shall not avail any input tax credit on such supplies. Similarly, in case the refund is filed by the recipient of deemed export supplies, an undertaking shall have to be furnished by him stating that refund has been claimed only for those invoices which have been detailed in statement 5B for the tax period for which refund is being claimed and that he has not availed input tax credit on such invoices. The recipient shall also be required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 or Integrated tax charged on the invoices for these inputs. This ITC is utilized for payment of Integrated tax on export of goods. Vide Circular No. 45/19/2018-GST dated 30.05.2018 issued by the Centre, it was clarified that refund of accumulated ITC of compensation cess on account of zero-rated supplies made under Bond/Letter of Undertaking is available even if the exported product is not subject to levy of cess. After the issuance of this Circular, the registered person decides to start exporting under bond/LUT without payment of tax. He also decides to avail (through the return in FORM GSTR-3B ) the ITC of compensation cess, paid on the inputs used in the months of July, 2017 to May, 2018, in the month of July, 2018. The registered person then goes on to file a refund claim for I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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' and uses the same in calculating the maximum refund amount which works out to be ₹ 50/- (assuming that export turnover is half of total turnover). Since both the balance in the electronic credit ledger at the end of the tax period for which the claim of refund is being filed and the balance in the electronic credit ledger at the time of filing the refund claim is ₹ 50/- (assuming that no other debits/credits have happened), the common portal will proceed to debit ₹ 50/- from the ledger as the claimed refun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 of the invoice for export. In this regard, it is emphasized that exports have been zero rated under the IGST Act and as long as goods have actually been exported even after a period of three months, payment of Integrated tax first and claiming refund at a subsequent date should not be insisted upon. In such cases, the jurisdictional Commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case. The same principle should be followed in case of export of services. 46. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of export of goods, realization of consideration is not a pre-condition. In rule 89 (2) of the RGST 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 claim for refund. It is therefore clarified that insistence on proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and should not be insisted upon. 49. As per section 16(2) of the IGST Act, credit of input tax may be availed for making zero rated supplies, notwithstanding that such supply is an exempt supply. In terms of section 2 (47) of the RGST Act, exempt supply includes non-taxable supply. Further, as per section 16(3) of the IGST Act, a registered person making zero rated supply shall be eligible to claim refund when he either makes supply of goods or services or bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods 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 RGST Rules prospectively in order to enable such exporters to avail the said facility. Notification No. F.12(46)FD/Tax/2017-Pt.-V-123 dated the 16th October, 2018 was issued to carry out the changes recommended by the GST Council. In addition, notification No. F.12(46)FD/Tax/2017-pt-III-92 dated 4th September, 2018 was rescinded vide notification No. F.12(46)FD/Tax/2017-Pt.-V-122 dated the 16th October, 2018. 52. The net effect of these changes is that any exporter who himself/herself imported any inputs/capital goods in terms of notification Nos. 78/2017-Customs and 79/2017-Customs both dated 13.10.2017, before the issuance of the notification No. F.12(46)FD/Tax/2017-Pt.-V-123 dated 16.10.2018, shall be eligible to claim refund of the Integrated tax paid on exports. Further, exporters who have imported inputs in terms of notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of output tax liability. Where there are multiple inputs attracting different rates of tax, in the formula provided in rule 89(5) of the RGST 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 the use of an input A (attracting 5 per cent GST) and input B (attracting 18 per cent GST) to manufacture output Y (attracting 12 per cent GST). ii. The refund of accumulated ITC in the situation at (i) above, will be available under section 54(3) of the RGST Act read with rule 89(5) of the RGST Rules, which prescribes the formula for the maximum refund amount permissible in such situations. iii. Further assume that the applicant supplies the output Y having value of ₹ 3,000/- during the relevant period for which the refund is being claimed. Therefore, the turnover of inverted rated supply of goods and services will be & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 a subsequent month, the accumulated input tax credit (ITC) required to be lapsed in terms of notification No. F.12(56)FD/Tax/2017-pt-III 76 dated 26.07.2018 read with circular No. 56/30/2018-GST dated 24.08.2018 issued by the Centre (hereinafter referred to as the said notification ). Some of these registered persons, who have attempted to claim refund of accumulated ITC on account of inverted tax structure for the same period in which the ITC required to be lapsed in terms of the said notification has been reversed, are not able to claim refund of accumulated ITC to the extent to which they are so eligible. This is because of a validation check on the common portal which prevents the value of input tax credit in Statement 1A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 3 What shall be the consequence if any registered person reverses the amount of credit to be lapsed, in terms the said notification, through 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? (a) As the registered person has reversed the amount of credit to be lapsed in the return in FORM GSTR- 3B for a month subsequent to the month of 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, he shall be liable to pay interest under sub-section (1) of section 50 of the RGST Act on the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om 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 RFD-06 and the payment order in FORM GST RFD-05. Refund of Integrated Tax paid on Exports 58. The refund of Integrated tax paid on goods exported out of India is governed by rule 96 of the RGST Rules. The shipping bill filed by an exporter is deemed to be an application for refund in such cases, but the same is deemed to have been filed only when the export manifest or export report is filed and the applicant has filed the return in FORM GSTR-3B for the relevant period duly indicating the integrated tax paid on goods exported in Table 3.1(b) of FORMGSTR- 3B . In addition, the exporter is expected to furnish the details of the exported goods in Table 6A of FORM GSTR-1 of the relevant period. Only where the common portal is able to validate the consistency of the details so entered by the applicant, 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 detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, it has been reported that tax authorities are excluding such invoices from the calculation of refund of unutilized ITC filed for the month of September, 2018. In this regard, it is clarified that Net ITC as defined in rule 89(4) of the RGST Rules means input tax credit availed on inputs and input services during the relevant period. Relevant period means the period for which the refund claim has been filed. Input tax credit can be said to have been availed when it is entered into the electronic credit ledger of the registered person. Under the current dispensation, this happens when the said taxable person files his/her monthly return in FORM GSTR-3B . Further, section 16(4) of the RGST Act stipulates that ITC may be claimed on or before the due date of filing of the return for the month 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BRC/FIRC in case of export of services and shipping bill (only in case of exports made through non- EDI ports) in case of goods 2 Refund of tax paid on export of services made with payment of tax Declaration under second and third proviso to section 54(3) BRC/FIRC /any other document indicating the receipt of sale proceeds of services Undertaking in relation to sections 16(2)(c) and section 42(2) Copy of GSTR-2A of the relevant period Statement 2 under rule 89(2)(c) Statement of invoices (Annexure-B) Self-certified copies of invoices entered in Annexure-A whose details are not found in GSTR-2A of the relevant period Self-declaration regarding nonprosecution 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/devel per without payment of tax Declaration und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to sections 16(2)(c) and section 42(2) Self-certified copies of invoices entered in Annexure-B whose details are not found in GSTR-2A of the relevant period Statement 1 under rule 89(5) Statement 1A 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 No. F.12(46)FD/Tax/2017-Pt-II-123 dated 18.10.2017 and Circular No. 14/14/2017-GST dated 06.11.2017 issued by Centre. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GSTIN of the Supplier Name of the Supplier Invoice Details Type Central Tax State Tax/ Union Territory Tax Integrated Tax Cess Eligible for ITC Amount of eligible ITC Whether invoices included in GSTR- 2A Y/N Invoice No. Date Value Inputs/Input Services/capital goods Yes/No/Partially 1 2 3 4 5 6 7 8 9 10 11 12 13 14 - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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