PROPOSED REFUND PROCESS UNDER GST – HAPPINESS ON THE WAY TO EXPORTERS – Goods and Services Tax – GST – By: – Pradeep Jain – Dated:- 17-11-2015 Last Replied Date:- 23-11-2015 – Introduction Goods and Services Tax (GST) is said to be the most awaited indirect tax reform of India since independence. Due to much hyped advantages, the industry is eager to welcome GST and so is the Government. On the way forward to GST, government has issued the Report of The Joint Committee on Business Processes for GST for the persual of industry at large. Suggestions have also been invited for the improvement of business processes discussed in this report. The report is divided into three parts namely GST Registration, GST payment process and GST refund process. In this piece of diction, we have tried to give an insight of the third part of this report namely GST Refund process . Refund mechanism under GST: simplified and tech-based:- The report says that GST law shall provide for the cases in which refun
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unt of a return not on account of any other liability. Further, the excess payment should not be due to difference in opinion, i.e. difference should not be on account of interpretation of a notification. In this situation, it has been proposed that the return may also be treated as refund application if the GST law so provides. At present, under service tax law, excess payment of service tax, if any, has to be intimated to superintendent as well as reflected in the ST-3 return; if the same is intended to be carried forward. There have been cases where show cause notices have been issued for disallowing the carry forward of excess paid service tax as no intimation was filed within prescribed time and/or it was not reflected in the ST-3 return. The proposed provision under GST law will eliminate the unnecessary litigation on account of technical lapses like this. Refund claim related to export goods: simple & integrated:- The most commonly known refund claim is that filed by the exp
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GSTN can be verified with those available at ICEGATE. Thus, there would be no need of submitting the same manually. The refund application will be submitted online within the time prescribed under GST law which is proposed as one year from relevant date. Definition of relevant date is to be prescribed by GST law. Mate s receipt and bill of lading are the crucial documents evidencing the factum of export. Thus, the scanned copies of mate s receipt and bill of lading will be submitted alongwith the refund application. Bank realization certificate (BRC) may not be available at the time of filing the refund application; thus, the same shall be submitted subsequently to GSTN. There will be inbuilt feature in the GSTN to track those export invoices in respect of which BRC has not been submitted within due time. This feature will send alert to respective officer for taking the appropriate action. The time limit for granting refund has been fixed as three months from the date of filing of app
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nd as three months from the date of filing the application. This time limit exists now also. However, it is also the fact on record that departmental officers are habitual of granting the refund after expiry of this time period. No doubt refund is allowed alongwith interest, but it is a cost to government. It is also a point to be noted that the report states that it was advised that 90% of the refund should be granted as soon as the export was done and remaining 10% should be granted after scrutinizing all the documents related to it. However, this suggestion has not been accepted and the time limit of three months has been fixed. Under GST era, the refund mechanism could have been drafted like it is allowed in case of drawback. Once the export is done, the drawback is allowed in the bank account of the exporter, there is no need of filing the application separately. This procedure should have been imported by GST also as it is easy and hassle free. Also, since everything is going to
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the above three, option to procure duty free inputs has been proposed to be done away with in GST regime. It is worth mentioning here that under this option, a no. of procedural formalities are to be followed like filing of requisite bond with excise officer, issue of procurement certificate, maintaining records of debit and credit in the bond, giving proof that the material so procured at NIL rate of duty has been utilized for the intended purpose, etc. Thus, this is the option which involves a no. of procedural formalities both at exporter s end as well as at the end of department. The report states that this option will not be available under GST regime. Thus, the supplier of goods will be required to pay the GST on the inputs so procured and in no case duty free inputs shall be allowed. Thus, the no. of formalities which are required to be fulfilled under present situation will not be there in the GST era and the exporters will be left with only two options as discussed above. Refu
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ms so filed in respect of deemed exports on the grounds that deemed exports are to be treated at par with the real exports for the purpose of rule 5 of the Cenvat Credit Rules, 2004. Some of such decisions allowing the refund claim in respect of deemed exports are cited as follows:- COMMISSIONER OF C. EX., SURAT VERSUS SHILPA COPPER WIRE INDUSTRIES [2008 (2) TMI 93 – CESTAT AHMEDABAD]; as affirmed by Gujarat High Court in the citation as COMMR. OF CENTRAL EXCISE Versus SHILPA COPPER WIRE INDUSTRIES [2010 (2) TMI 711 – GUJARAT HIGH COURT] NBM INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJKOT [2009 (3) TMI 535 – CESTAT, AHMEDABAD] as affirmed by Gujarat High Court having citation as COMMISSIONER – CENTRAL EXCISE AND CUSTOMS Versus NBM INDUSTRIES [2011 (9) TMI 360 – GUJARAT HIGH COURT] COMMISSIONER OF C. EX., AHMEDABAD VERSUS RANGDHARA POLYMERS [2010 (1) TMI 637 – CESTAT, AHMEDABAD] as affirmed by High court under citation Commissioner of Central Excise & Customs, Ahmedabad-II
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o file alongwith certificate from chartered accountant certifying that the burden of GST has not been passed. GST law may also provide a threshold below which no such certificate shall be required and self certification would be sufficient for claiming the refund. Thus, providing the specific provision in case of deemed exports will put a full stop on the litigation ongoing in current scenario. Tax refund for international tourists: new scheme proposed in GST regime:- Tax refund for international tourists scheme provide an opportunity to foreign tourists to buy goods manufactured during their stay in any country and claim the refund of tax suffered by such goods at the time of their exit from that country. About 52 countries are following this practice to encourage the sale of their goods to foreign tourists who visit their country and buy goods manufactured there. In India, this scheme will be implemented through retailers who shall be specifically registered for the purpose of this s
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orters and other tax payers too. – Reply By Subhash Modi – The Reply = However in the proposed GST legislation there is post refund condition that the value of the exported goods ought to be realised in free foreign exchange within the initial or extended time limit prescribed under FEMA, 1999 which at present is condition only under the proviso to Section 75 of the Customs Act, 1962 read with the Rule 16A of the Customs, Excise Duties and Service Tax Drawback Rules, 1995 qua the customs portion of the drawback and the Foreign Trade Policy qua the the relief of input customs duties exemption for manufacture and export of the resultant product. Failure to realise the export value in foreign exchange entails (under the Drawback Rules or the FTP) recovery of the customs portion of the Drawback availed and paid or the import inputs custom duties that were saved even if the export has been consummated. There is no such condition in respect of: Cenvat credit of input duties or service tax av
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