Refund Process in GST Regime – GST
GST
Dated:- 19-12-2015
REPORT OF THE JOINT COMMITTEE ON BUSINESS PROCESSES FOR GST ON REFUND PROCESSES
SITUATIONS WHERE REFUND WOULD ARISE:
* Excess payment due to mistake and inadvertence,
* Export (including deemed export),
* Finalization of Provisional Assessment,
* Refund of pre deposit in case of Appeal or Investigation,
* Refund for Tax payment on transactions by UN bodies,
* CSD Canteens, Para-military forces canteens, etc.
* Refund from Manufacturing / Generation/ Production/Creation of Tax- free supplies or Non-GST Supplies,
* Refund of Carry Forward Input Tax Credit
* Refund on account of year end or volume based incentives.
* Tax refunds for International Tourists.
EXCESS PAYMENT OF TAX DUE TO MISTAKE OR INADVERTENTCE
* The situations where the tax payer has made excess payment of tax either by mistake or by inadvertence resulting in more payment of tax than due to the Government.
* Such excess paymen
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duty paid inputs, availing the input tax credit thereon and exporting finished goods after payment of duty (after utilizing such input tax credit) and thereafter claiming the rebate of the duty paid on exported goods.
EXPORT (INCLUDING DEEMED EXPORT) OF GOODS / SERVICES
* The following process is proposed for making this system as simple as possible:
* Verification: The IEC details of taxpayer will be captured at the time of issuance of GSTIN and the same will be verified online with DGFT.
* Application: The refund of ITC / rebate of GST paid on exported goods may be granted on submission of application to this effect by the taxpayer.
* Since the trigger point for refund is export of goods, therefore the event of export will be verified online.
EXPORT (INCLUDING DEEMED EXPORT) OF GOODS / SERVICES
* Linkage between ICEGATE of Customs administration and the proposed GSTN of GST administration may be established so that online verification of the exports can be carried out.
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t of non-passing of the GST burden by the taxpayer.
* GST Law may provide for certain predefined period during which refund may not be granted which can be regarded as the mandatory waiting period for the outcome of the appeal / application for stay.
* GST Law Drafting Committee may also consider for providing powers to jurisdictional authority at sufficiently senior level for withholding the refund in exceptional cases on the condition that interest at appropriate rate has to be paid.
PRE DEPOSIT IN CASE OF APPEAL OR INVESTIGATION
* The refund of such amount may be handled as per the procedure given below:
* A separate mechanism for the accounting.
* Amount of tax paid during investigation, etc. become non leviable once the investigation is finalized and / or an adjudication order in favour of the taxpayer is issued.
* As soon as the investigation, etc. is over which
* does not lead to issuance of a show cause notice, or
* where after investigation, show cause notice
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atements (without purchase invoices) along with their claim for refund.
* While making supplies to such bodies, the suppliers must indicate the Unique ID on the invoices.
* Form of application for refund which may be used by such bodies is enclosed as Annexure-VII to this document.
* Same process to apply for CSD canteen/CPMF canteen etc. No exemption in Tax but refund of Tax to be made.
REFUND OF CARRY FORWARD INPUT TAX CREDIT
* The ITC may accumulate on account of the following reasons:
* Inverted Duty Structure i.e. GST on output supplies is less than the GST on the input supplies;
* Stock accumulation;
* Capital goods; and
* Partial Reverse charge mechanism for certain services.
* GST Law may provide that refund of carried forward ITC may not be allowed and such amount would be carried forward to the next tax period (s).
* In cases of inverted duty structure, cash refund may be granted after due audit and should be sanctioned only after the input tax credit ha
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g of refund application.
* The following dates are recommended as relevant dates for different type of refund cases
S.NO.
SITUATION OF REFUND
RELEVANT DATE
1.
On account of excess payment of Date of payment of GST due to mistake or inadvertence.
Date of payment of GST.
2.
On account of Export of Goods.
Date on which proper officer under the Custom Act gives an order for export known as “LET EXPORT ORDER”.
3.
On account of Export of Services.
Date of BRC.
4.
On account of finalization of provisional assessment.
Date of the finalization order.
5.
In pursuance of an appellate authority's order in favour of the taxpayer.
Date of communication of the appellate authority's order.
6.
On account of payment of GST During investigation, etc. when no/less liability arose at the time of finalization of investigation proceedings or issuance of adjudication order.
Date of communication of adjudication order or order relating to completion of investigation.
7.
On account of
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tant's Certificate may be called for evidencing that the tax burden has not been passed on to the buyer. Under Principle of “unjust enrichment”.
DOCUMENTS TO BE FILED FOR REFUND
* EXPORT OF GOODS:
SHIPPING BILL
NOT NEEDED
TO BE VERIFIED ONLINE
Export Invoice
Not needed..
To be verified online
Packing List
Not needed..
To be verified online
Mate Receipt
Needed to be filed online with refund Application.
Bill of Lading
Needed to be filed online with refund application.
BRC
To be filed within one year of Export or in a Period as prescribed by RBI. To be submitted with application in case of advance payment.
DOCUMENTS TO BE FILED FOR REFUND
* EXPORT OF SERVICES:
* Invoice
* Bank Realization Certificate (BRC). No refund without filing of BRC. Cut-off date for filing of refund to be linked to receipt of BRC
* No custom documents that can substantiate the occurrence of event of export as no shipping bill is required to be filed.
PROCEDURE:
It is recommended that
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order to ensure the correctness of the decision of refund sanctioning authority.
* Pre-audit: Besides this, for refund amounts exceeding a predetermined amount a provision for pre-audit of refund application.
PROCEDURE:
* Show Cause Notice: If the refund is not found to be legal or correct for any reason, then the jurisdictional authority should issue Show Cause Notice (SCN) to the applicant.
* Consumer Welfare Fund: In case, the refund application is found to be in order but does not satisfy the test of unjust enrichment, the refund amount, after sanction, would be credited to the Consumer Welfare Fund.
* Minimum Limit: It is recommended that an amount in the range of ₹ 500-1000/- may be fixed below which refund shall not be granted.
PROCEDURE:
Other important points:
* Return itself may be treated as a refund application in specified cases.
* On filing of the electronic application, a receipt/ acknowledgement number to be generated & communicated to the applican
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