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TMI BlogClarification on refund related issuesX X X X Extracts X X X X X X X X Extracts X X X X ..... r : 2. Bunching of refund claims across financial years 2.1 It may be recalled that the restriction on clubbing of tax periods across different financial years was put in vide para 11.2 of Circular No. 37/11/2018-GST, dated March 15, 2018 issued by the Centre. The said circular was rescinded being subsumed in the master circular on refunds issued vide memo No. 3561/GST-2, Panchkula dated December 16, 2019 (Circular No. 125/44/2019-GST, dated November 18, 2019 issued by the Centre) and the said restriction on the clubbing of tax periods across financial years for claiming refund thus has been continued vide paragraph 8 of the Master Circular on Refunds issued vide Memo No. 3561/GST-2, Panchkula dated December 16, 2019 (Circular No. 125/44/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file the tax refund electronically, or to accept the same manually within four weeks from the order. The honourable Delhi High Court vide para 12 of the aforesaid order has observed that the circulars can supplant but not supplement the law. Circulars might mitigate rigours of law by granting administrative relief beyond relevant provisions of the statute, however, Central Government is not empowered to withdraw benefits or impose stricter conditions than postulated by the law. 2.3 Further, same issue has been raised in various other representations also, especially those received from the merchant exporters wherein merchant exporters have received the supplies of goods in the last quarter of a financial year and have made exports in the ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulation on account of inverted duty structure and such applicants have sought refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the HGST Act. 3.2 It may be noted that refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the HGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. It is noteworthy that, the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of sub-section (3) of section 54 of the HGST Act. It is hereby clarified that refund of accumulated ITC under clause (ii) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., refund claims on supplies other than zero-rated supplies, no separate debit of ITC from electronic credit ledger is required to be made by the applicant at the time of filing refund claim, being claim of tax already paid. However, the total tax would have been normally paid by the applicant by debiting tax amount from both electronic credit ledger and electronic cash ledger. At present, in these cases, the amount of admissible refund, is paid in cash even when such payment of tax or any part thereof, has been made through ITC. 4.3.1 As this could lead to allowing unintended encashment of credit balances, this issue has been engaging attention of the Government. Accordingly, vide Notification No. 19/GST-2, dated March 31, 2020 , sub-ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anges is that any such refund of tax paid on supplies other than zero-rated supplies will now be admissible proportionately in the respective original mode of payment, i.e., in cases of refund, where the tax to be refunded has been paid by debiting both electronic cash and credit ledgers (other than the refund of tax paid on zero-rated supplies or deemed export), the refund to be paid in cash and credit shall be calculated in the same proportion in which the cash and credit ledger has been debited for discharging the total tax liability for the relevant period for which application for refund has been filed. Such amount, shall be accordingly paid by issuance of order in Form GST RFD-06 for amount refundable in cash and Form GST PMT-03 to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not available in Form GSTR-2A and therefore it becomes very difficult to distinguish ITC on capital goods and/or input services out of total ITC for a relevant tax period. It has been recommended that a column relating to HSN/SAC Code should be added in the statement of invoices relating to inward supply as provided in annexure B of Master Circular on Refunds issued vide Memo No. 3561/GST-2, Panchkula, dated December 16, 2019 (Circular No. 125/44/2019-GST, dated November 18, 2019 issued by the Centre) so as to easily identify between the supplies of goods and services. 6.2 The issue has been examined and considering that such a distinction is important in view of the provisions relating to refund where refund of credit on capital goods an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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