Export related Refunds ( Issue and Clarification Form)
By: – CASanjay Kumawat
Goods and Services Tax – GST
Dated:- 4-5-2018
The term export means sending of goods or services produced in one country to another country. The seller of such goods and services is referred to as an exporter; the foreign buyer is referred to as an importer.
Under GST, “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India [Section 2(5) of the IGST Act, 2017] and “export of services” means the supply of any service when,-(i) the supplier of service is located in India; (ii) the recipient of service is located outside India; (iii) the place of supply of service is outside India; (iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and (v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with
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Government has taken various steps, which includes amendments in the rules, changes in the business procedures of common portal and customs automated system to address the systemic issues. Many of the errors plaguing the claims for refunds are on account of inadequate familiarisation of the exporters with the GST laws and data entry errors in the various GSTRs / forms.
Government has carried out outreach programmes by issuing guidance circulars, advisories, FAQs, advertisements etc and also provided an alternative procedure involving manual interface where the errors could not be corrected online. The efforts are beginning to show positive results. A standard operating procedure applicable to both Central and State GST has been put in place by virtue of various Circulars and clarifications issued with regard to processing of ITC refund.
GST Council, in its last meeting on 10th March 2018, has directed all States tax authorities to proactively clear refund claims. Exporting community
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nts and in some cases, they are not giving acknowledgement to the assessee after accepting the refund application. According to Tax Officer, reason behind non-accepting is that assessee's tax file is not reflecting in their system or refund application is not reflecting on their computer system. (Only God knows what is the logic behind this reason/excuse despite being of the fact that the same tax officers are handling other tax related matters of the same assessee.)
Clarification:
As per para 2.5 of the Circular No. 17/17/2017 – GST, dated 15.11.2017, it has been clarified that the registered person needs to file the refund claim with the jurisdictional tax authority to which the taxpayer has been assigned as per the administrative order issued in this regard by the Chief Commissioner of Central 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 Sta
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ing the baseless reasons.
Issue#2: How to get refund of GST paid in case of export of goods? Is shipping filed sufficient for claiming of refund?
Clarification: As per para 2.2 of the Circular No. 17/17/2017 – GST, dated 15.11.2017, it has been clarified that the refund of integrated tax paid on goods exported out of India is governed by Rule 96 of the CGST Rules. The shipping bill filed by an exporter shall be deemed to be an application for refund in such cases. The application shall be deemed to have been filed only when export manifest or export report is filed and the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be. Upon receipt of the information regarding furnishing of a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be, from the common portal, the system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of such export shall be electronically credited to
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portal and a print out of the said form shall be submitted before the jurisdictional proper officer along with all necessary documentary evidences as applicable (as per the details in statement 2 or 4 of Annexure to FORM GST RFD – 01), within the time stipulated for filing of such refund under the CGST Act.
Issue#4: How to get refund of unutilized input tax credit on inputs or input services used in making zero-rated supplies?
Clarification: As per para 2.4 of the Circular No. 17/17/2017 – GST, dated 15.11.2017, it has been clarified that the application for refund of unutilized input tax credit on inputs or input services used in making such zero-rated supplies shall be filed in FORM GST RFD-01A on the common portal and the amount claimed as refund shall get debited in accordance with sub-rule (3) of rule 86 of the CGST Rules from the amount in the electronic credit ledger to the extent of the claim. The common portal shall generate a proof of debit (ARN- Acknowledgement Receipt N
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2.4 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that a supplier availing of drawback only with respect to basic customs duty shall be eligible for refund of unutilized input tax credit of central tax / State tax / Union territory tax / integrated tax / compensation cess under the said provision. It is further clarified that refund of eligible credit on account of State tax shall be available even if the supplier of goods or services or both has availed of drawback in respect of central tax.
Issue#6: The refund claims are not being processed on account of mis-matches between data contained in FORM GSTR-1, FORM GSTR-3B and shipping bills/bills of export. How refund will be processed?
Clarification: As per para 3 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that the facility of filing of Table 9 in FORM GSTR-1, an amendment table which allows for amendments of invoices/ shipping bills details furnished in FORM GSTR-1 for
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cation: As per para 4.1 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified 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.
Issue#8: 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? Is it valid process?
Rule 96A (1) of the CGST 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 a
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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.
Issue#9: Whether with respect to a refund claim, deficiency memo can be issued more than once?
Clarification: As per Rule 90 of the CGST Rules, once an applicant has been communicated the deficiencies in respect of a particular application, the applicant shall furnish a fresh refund application after rectification of such deficiencies.
As per para 6.1 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that there can be only one deficiency memo for one refund application and once such a memo has been issued, the applicant is required to file a fresh refund application, manually in FORM GST RFD-01A. This fresh application would be accompanied with the original ARN
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mentions that a person intending to export under LUT is required to give a self-declaration at the time of submission of LUT that he has not been prosecuted. Persons who are not eligible to export under LUT are required to export under bond.
Clarification: As per para 7.2 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that this requirement is already satisfied in case of exports under LUT and asking for self-declaration with every refund claim where the exports have been made under LUT is not warranted.
Issue#11: Whether transitional credit pertains to duties and taxes paid under the existing laws can be treated as part of 'Net ITC'?
Refund of unutilized input tax credit is allowed in two scenarios mentioned in sub-section (3) of section 54 of the CGST Act. These two scenarios are zero rated supplies made without payment of tax and inverted tax structure. In sub-rule (4) and (5) of rule 89 of the CGST Rules, the amount of refund under these scenarios i
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larification: As per para 9 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been 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 for export and the same is done under an invoice issued under rule 46 of the CGST Rules. The value recorded in the GST invoice should normally be the transaction value as determined under section 15 of the CGST 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 sanctioned as refund.
Issue#13: Whether refund of taxes paid under existing laws allowed through FORM GST RFD-01A?
Sub-sections (3), (4) and (5) of sect
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. In this regard, attention is invited to sub-section (3) of section 142 of the CGST Act which provides that the amount of refund arising out of such claims shall be refunded in cash. Further, the first proviso to the said sub-section provides that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse and therefore, will not be transitioned into GST. Furthermore, it should be ensured that no refund of the amount of CENVAT credit is granted in case the said amount has been transitioned under GST. The field formations are advised to process such refund applications accordingly.
Issue#14: What is the filing frequency of refund applications?
Section 2(107) of the CGST Act defines the term “tax period” as the period for which the return is required to be furnished. The terms 'Net ITC' and 'turnover of zero rated supply of goods/services' are used in the context of the relevant period in rule 89(4) of CGST Rules. The phrase 'relevant
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Clarification: As per para 12 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that the realization of convertible foreign exchange 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 CGST Rules, a statement containing the number and date of invoices and the relevant Bank Realisation 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.
Issue#16: Whether benefit
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s of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act. It may also be noted that the exporter of such goods can export the goods only under LUT / bond and cannot export on payment of integrated tax. In this connection, Notification No. 3/2018-Central Tax, dated 23.01.2018 may be referred.
Issue#17: What is the requirement of invoices for processing of claims for refund? (For processing of refund claims, copies of invoices and other additional information are being insisted upon by many field formations.)
Clarification: As per para 14 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that only the specified statements would be required for processing of refund claims because the details of outward supplies and inward supplies would be available on the common portal which would be matched. Most of the other information like shipping bills details etc. would also be available because of the linkage of the common portal with th
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available with the officers electronically:
Table
Type of Refund
Documents
Export of Services with payment of tax (Refund of IGST paid on export of services)
* Copy of FORM RFD-01A filed on common portal
* Copy of Statement 2 of FORM RFD-01A
* Invoices w.r.t. input, input services and capital goods
* BRC/FIRC for export of services
* Undertaking / Declaration in FORM RFD-01A
Export (goods or services) without payment of tax (Refund of accumulated ITC of IGST / CGST / SGST / UTGST / Cess)
* Copy of FORM RFD-01A filed on common portal
* Copy of Statement 3A of FORM RFD-01A generated on common portal
* Copy of Statement 3 of FORM RFD-01A
* Invoices w.r.t. input and input services
* BRC/FIRC for export of services
* Undertaking / Declaration in FORM RFD-01A
Issue#18: From which date, these instruction will be applicable?
Clarification: As per para 15 of the Circular No. 37/11/2018 – GST, dated 15.03.2018, it has been clarified that these instructions shall appl
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