Refunds
GST FAQ 3rd Edition – December, 2018 – GST Frequently Asked Questions (FAQs)
GST
14. Refunds
Q 1. What are the situations which may give rise to refund under GST?
Ans. A claim for refund may arise on account of-
1. Export of Goods or services on payment of tax
2. Supply of goods or services to SEZs units and developers on payment of tax
3. Export of Goods or services under Bond/Letter of Undertaking, without payment of tax
4. Supply of goods or services to SEZs units and developers under Bond/Letter of Undertaking, without payment of tax
5. Deemed Exports (refund available to both supplier and recipient)
6. Refund of taxes on purchase made by UN Agencies, Embassies etc
7. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court
8. Refund of accumulated Input Tax Credit on account of inverted duty structure
9. Finalisation of provisional assessment
10. Excess balance in electronic cas
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d as zero rated?
Ans. In terms of Section 16(1) of IGST Act, following supplies are considered as zero rated
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
Q 4. The GST Law allows exports to be made under a LUT in all cases. Is this statement true or false?
Ans. The facility of export under LUT is available to all exporters in terms of notification No. 37/2017- Central Tax dated 4th October, 2017, except to those who have been prosecuted for any offence under the CGST Act or the IGST Act or any of the existing laws in force in a case where the amount of tax evaded exceeds two hundred and fifty lakh rupees. Para 2(d) of the Circular No. 8/8/2017-GST dated 4th October, 2017, 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 un
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m made u/s 54?
Ans. Rule 90 (3) of the CGST Rules provides for communication in FORM GST RFD-03 (deficiency memo) where deficiencies are noticed. The said sub-rule also provides that once the deficiency memo has been issued, the claimant is required to file a fresh refund application after the rectification of the deficiencies.
Q 8. Can deficiency memo be issued more than once for a refund claim?
Ans. No. Rule 90 of the CGST Rules clearly states that 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. Thus, 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. Once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with
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mstances of each case. Reference may be made to CBIC Circular no. 37/11/2018-GST dated 15.03.2018.
Q 11. What are the documents to be submitted along with a refund claim of accumulated ITC on account of export of goods and services without payment of tax?
Ans. The following documents will have to be submitted :
* Copy of FORM RFD-01A filed on common portal
* Copy of ARN
* Copy of Statement 3A of FORM RFD-01A generated on common portal
* Copy of Statement 3 of FORM RFD-01A
* Printout of GSTR-2A and in cases where invoice details are not reflected in the GSTR-2A, the copy of Invoices w.r.t. input and input services. (Refer Circular No. 59/33/2018-GST dated04th September 2018)
* BRC/FIRC for export of services
* Undertaking / Declaration in FORM RFD-01A
Q 12. What are the documents to be submitted along with a refund claim of IGST paid on export of services?
Ans. The following documents will have to be submitted
* Copy of FORM RFD-01A filed on common portal
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upplies by fulfilling conditions under notification no.40/2017-Central Tax (Rate) dated 23.10.2017 (corresponding IGST notification no.41/2017-Integrated Tax (Rate) dated 23.10.2017) and paying tax @ 0.1%, he can claim refund of unutilised ITC on account of inverted duty structure.
Q 15. If such supplies are not zero rated, will it mean that the supplier will not be entitled to any refund on such supplies?
Ans. No. The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure as per the provisions of clause (ii) of the first proviso to subsection (3) of section 54 of the CGST Act.
Q 16. What is meant by the terms “relevant period” in so far as refund claims under GST are concerned. Is it different from “tax period” defined under the law?
Ans. 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
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filed on a monthly basis?
Ans. The Exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.
Q 19. Can refund of taxes paid under existing laws (Central Excise/Service Tax) be made under GST?
Ans. No. Refund claims of taxes paid under existing laws have to be dealt with as per the provisions of existing laws only.
Q 20. How will refund claims made under existing laws be dealt with?
Ans. As per section 142(3) of the CGST Act, 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.
Q 21. For Export of goods made under LUT, what i
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Reserve Bank of India. (The underlined portion has been inserted vide CGST (Amendment) Act, 2018 and shall not into force once the same is notified).
Q 23. What are the circumstances in which manual filing of refund claims is permitted under GST?
Ans. Manual filing of refund claims is permitted, vide circular no.17/17/2017-GST dated 15th November 2017 and circular no.24/24/2017 dated 24th November 2017 and circular no.36/10/2018-GST dated 13th March 2018, if the claim is on account of following
(i) refund of unutilized input tax credit on account of zero rated supplies
(ii) refund of unutilized input tax credit where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies) of goods or services or both except those supplies which are notified by the
Government on the recommendations of the Council.
(iii) Refund on account of supplies in terms of notification Nos. 40/2017-Cen
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tion No. 57/2017-Central Tax dated 15.11.2017 refers), such persons shall apply for refund on a quarterly basis.
The Exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.
RFD-10 has to be filed by UIN entities on a quarterly basis.
Q 26. Can refund claims be filed even if GSTR-1/3B for the particular period has not been filed?
Ans. No. Refund claim for a tax period can be filed only after filing the details in FORM GSTR-1 for the said tax period. It is also to be ensured that a valid return in FORM GSTR-3B has been filed for the last tax period before the one in which the refund application is being filed.
Q 27. Will provisionally accepted ITC be allowed as refund?
Ans. Yes, it will be allowed for the time being. Since the date of furnishing of FORM GSTR-1 from July, 2017
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d is rejected under rule 92 of the CGST Rules, either fully or partly, the amount debited, to the extent of rejection, shall be recredited to the electronic credit ledger by an order made in FORM GST RFD-1B until the FORM GST PMT-03 is available on the common portal. (Para 4 of circular no. 59/33/2018-GST dated 04th September, 2018 refers).
Q 30. In respect of deemed export supplies, who can claim refund?
Ans. The third proviso to rule 89(1) of the CGST Rules allows the recipient or the supplier to apply for refund of tax paid on such deemed export supplies.
Q 31. What are the documents required to be filed where the claim is on account of deemed exports?
Ans. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in notification No. 49/2017-Central Tax dated 18.10.2017 are also required to be furnished which includes an undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of su
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ption of Supply
1
Supply of goods by a registered person against Advance Authorisation
2
Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation
3.
Supply of goods by a registered person to Export Oriented Unit
4.
Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation
Q 33. What are the situations in which refund of accumulated ITC is allowed under GST?
Ans. Refund of accumulated ITC is allowed only when the credit accumulation is on account of zero rated supply or on account of inverted rate structure.
Q 34. What are the situations in which refund of accumulated ITC will not be allowed even if it's a case of zero rated supplies or inverted rate structure?
Ans. Refund of ITC will not be allowed where the goods exported out of India are subject to export duty or where the supplier claims refund of IGST paid on suc
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ernment has notified the following goods in respect of which unutilized ITC will not be admissible as refund.
Sr.No
Tariff item, heading, sub-heading or Chapter
Description of Goods
1
8601
Rail locomotives powered from an external source of electricity or by electric accumulators
2
8602
Other rail locomotives; locomotive tenders; such as Diesel-electric locomotives, Steam locomotives and tenders thereof
3
8603
Self-propelled railway or tramway coaches, vans and trucks, other than those of heading 8604
4
8604
Railway or tramway maintenance or service vehicles, whether or not self-propelled (for example, workshops, cranes, ballast tampers, trackliners, testing coaches and track inspection vehicles)
5
8605
Railway or tramway passenger coaches, not self-propelled; luggage vans, post office coaches and other special purpose railway or tramway coaches, not self-propelled (excluding those of heading 8604)
6
8606
Railway or tramway goods vans and wagons, not self-pro
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Zone Developer of special Economic Zone Unit.
Q 37. How will the refund amount be calculated in case of claim of unutilised ITC on account of zero rated supplies?
Ans. The refund will be calculated based on the formula Refund Amount = (turnover of zero rated supply of goods + turnover of zero rated supply of services ) x Net ITC /Adjusted total turnover.
Q 38. How will the refund amount be calculated in case of claim of unutilised ITC on account of inverted rate structure?
Ans. In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula –
Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC / Adjusted Total Turnover} – tax payable on such inverted rated supply of goods.
Q 39. What does “Net ITC” mean for the purpose of calculation of refund amount?
Ans. “Net ITC” for the purpose of refund on account of zero rated supply means input tax credit availed on inputs and input services
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of zero-rated supply of services” means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:-
Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period.
Q 42. What does Adjusted Total Turnover mean for the purpose of calculation of refund amount?
Ans. “Adjusted Total turnover” means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding –
(a) the value of exempt supplies other than zero-rated supplies; and
(b) the turnover of supplies in respect of which refund is claim
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d disbursed by Customs.
Q 46. What are the validations required for processing refund claim of IGST on export of goods?
Ans. For processing such refund, GST system transmits invoice level data of Table 6A in GSTR 1 subject to the following validations: –
1. GSTR-3B is filed for the corresponding period, with admitted tax liability under Table 3.1(b);
2. Export invoices are submitted in GSTR-1/Table 6A and have correct shipping bill number, shipping bill date and port code;
3. The admitted tax liability of IGST under table 3.1(b) of GSTR-3B, is equal to, or greater than, the IGST amount claimed to have been paid under Table 6A of GSTR-1 of the corresponding period.
Q 47. Can refund of IGST on export of goods be withheld under any circumstances?
Ans. Yes. Situations where refund of IGST on goods can be withheld are as under
(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund
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he concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to refund the amount after passing an order in FORM GST RFD-06.
Further, as per Circular no.17/17/2017-GST, any order regarding withholding of such refund or its further sanction respectively in PART-B of Form GST RFD-07 or Form GST RFD-06 shall be done manually till the refund module is operational on the common portal.
Q 49. When will interest become payable in a refund claim?
Ans. As per Section 56 of CGST Act, if any tax ordered to be refunded under section 54 (5) to any applicant is not refunded within sixty days from the date of receipt of application under section 54(1), interest at such rate not exceeding six per cent. as may be specified in the notification issued by the Government on the recommendations of the Council shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application
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al, interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount. Thus, in cases of refund of pre-deposit amount, interest will have to be paid from the date of payment till the date of refund of the amount (and not from date of receipt of claim for such refund of pre-deposit)
Q 50. What is the rate of interest notified by the Government for delayed settlement of refund claims?
Ans. As per notification no.13/2017-Central Tax dated 28th June 2017, interest @6% will be payable under Section 56. (normal claims where payment is delayed beyond 60 days from the receipt of application). The same rate of interest @6% will be payable in cases of refund of pre-deposit. Interest @ 9% will be payable in cases of refund falling under proviso to Section 56. (cases where refund claim arises as a consequence of court order/judgement).
Q 51. How will an order for payment of interest be made un
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needs to be completed within 15 days. If the documents are in order, the acknowledgement needs to be given within 15 days from the date of receipt of application and the acknowledgement will also show the date of receipt. The period of 60 days starts from such date of receipt and not from the date when acknowledgement is given which can be any date within 15 days from the date of receipt of application.
Q 53. What is the relevant date within which claim for refund is to be filed?
Ans. A claim for refund is to be filed within 2 years of a relevant date. Relevant date is different for different scenarios which is as under:
(a) in the case of goods exported out of India where a refund of tax paid is available in respect of the goods themselves or, as the case may be, the inputs or input services used in such goods, –
(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or
(ii) if the goods are exported
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hority, Appellate Tribunal or any Court, the date of communication of such judgment, decree, order or direction;
(e) in the case of refund of unutilized input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises;
(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;
(g) in the case of a person, other than the supplier, the date of receipt of goods or services by such person; and
(h) in any other case, the date of payment of tax.
It is to be noted that for refund claim filed by UN bodies, Embassies etc the relevant date and the time period within which refund claim is to be filed is specified in Section 54(2) itself, which is before the expiry of six months from the last day of the month in which such supply was received.
Q 54. What is the significance of relevant date for the purpose of refund?
Ans. Relevant Date assumes signi
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018) so as to provide that the refund of integrated tax paid on export of goods or services is not permitted to such persons who have received supplies on which the supplier has availed the benefit of Notification no. 48/2017-Central Tax dated 18.10.2017 (supplies regarded as deemed exports) or Notification no. 40/2017- Central Tax (Rate) dated 23.10.2017 (supplies to merchant exporters at concessional rate of CGST+SGST) or notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017. (supplies to merchant exporters at concessional rate of IGST).
Thus, in respect of deemed export supplies/merchant exports, the option given under section 16(3) of IGST Act, 2017, (of either paying tax and claiming refund of IGST or exporting under Bond and claiming refund of ITC), gets restricted and the zero-rated supplier can only avail of refund of ITC, as per Rule 89, in such cases.
Q 57. Are refunds of IGST on export of goods automated under the GST Law?
Ans. Yes. The IGST refund module has an
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Rule 91 of the CGST Rules deal with the grant of provisional refund. The provisional refund in accordance with the provisions of section 54(6) shall be granted subject to the condition that the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
Q 60. How will provisional refunds be processed?
Ans. The proper officer, after scrutiny of the claim and the evidence submitted in support thereof and on being prima facie satisfied that the amount claimed as refund under sub-rule (1) is due to the applicant in accordance with the provisions of section 54(6), shall make an order in FORM GST RFD-04, sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of the acknowledgement under
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Rule 91(1) (condition that the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees).
Q 63. How will claims be processed finally after sanction of provisional refund?
Ans. After sanction of the provisional refund, final order is to be issued within sixty days (after due verification of the documentary evidences) of the date of receipt of the complete application form.
The proper officer has to validate the refund statement details with details in Form GSTR-1 (or Table 6A of Form GSTR-1) available on the common portal. Details of IGST paid, in case of export of services on payment of IGST, also needs to be verified from Form GSTR 3 or Form GSTR 3B as the case may be, filed by the applicant and it needs to be verified that the refund amount claimed shall be
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details of the refund on account of Central Tax/Integrated Tax/Cess along with taxpayer bank account details shall be manually submitted in PFMS system by the jurisdictional Division's DDO and a signed copy of the sanction order shall be sent to PAO office for release of payment.
Q 65. Will both SGST and CGST be paid by the same authority?
Ans. No. The refund application for various taxes i.e. CT/ST/UT/IT/Cess is required be filed with that tax authority to whom the taxpayer has been assigned and shall be processed and sanction order for all taxes would be issued by the said authority. (In case the taxpayer has not been assigned, he can submit his application with any tax authority). However, payment of the sanctioned refund amount shall be made only by the respective tax authority of the Centre or State Government. The payment of the sanctioned refund amount in relation to Central Tax/ Integrated Tax/ /Cess shall be made by the Central Tax authority while payment of the sanctioned r
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the same, through the nodal officer, to the State tax authority for making payment of the sanctioned refund amount in relation to State tax and vice versa. The aforesaid communication shall primarily be made through e-mail attaching the scanned copies of the sanction order [FORM GST RFD-04 or FORM GST RFD-06], the application for refund in FORM GST RFD-01A and the Acknowledgement Receipt Number (ARN). Accordingly, the jurisdictional proper officer of Central or State Tax, as the case may be, shall issue FORM GST RFD-05 and send it to the DDO for onward transmission for release of payment. After release of payment by the respective PAO to the applicant's bank account, the nodal officer of Central tax and State tax authority shall inform each other. The manner of communication as referred earlier shall be followed at the time of final sanctioning of the refund also.
Q 67. Who can file claim refund on account of supply to SEZs?
Ans. The DTA supplier will have to file the refund claim i
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of invoices as provided in rule 46 along with the evidence regarding the endorsement specified in the second proviso to sub-rule (1) in the case of the supply of goods made to a Special Economic Zone unit or a Special Economic Zone developer;
2. a statement containing the number and date of invoices, the evidence regarding the endorsement specified in the second proviso to sub-rule (1) and the details of payment, along with the proof thereof, made by the recipient to the supplier for authorised operations as defined under the Special Economic Zone Act, 2005, in a case where the refund is on account of supply of services made to a Special Economic Zone unit or a Special Economic Zone developer;
3. a declaration to the effect that the Special Economic Zone unit or the Special Economic Zone developer has not availed the input tax credit of the tax paid by the supplier of goods or services or both, in a case where the refund is on account of supply of goods or services made to a Special
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alculated?
Ans. The claim (of accumulated ITC) will be calculated using the following formula
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC /Adjusted Total Turnover
Q 72. What are the documents to be filed along with the claim of refund on account of deemed exports, if the claim is to be filed by the supplier?
Ans. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in notification no.49/2017-Central Tax dated 18.10.2017 are required to be furnished. The notification specifies the following documents.
1. Acknowledgment by the jurisdictional Tax officer of the Advance Authorisation holder or Export Promotion Capital Goods Authorisation holder, as the case may be, that the said deemed export supplies have been received by the said Advance Authorisation or Export Promotion Capital Goods Authorisation holder, or a copy of the tax invoice under which such s
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n undertaking by the supplier of deemed export supplies that he shall not claim the refund in respect of such supplies is also required to be furnished manually.
The procedure regarding procurement of supplies of goods from DTA by Export Oriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / Software Technology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export as laid down in Circular No. 14/14/2017-GST dated 06.11.2017 needs to be complied with.
Q 74. What will be the eligible amounts for refund in case of deemed exports?
Ans. While filing RFD-01A (recipient of deemed exports), taxpayers need to enter the amount that they want to get as refund. The lowest of the following three categories are eligible for refund.
1. Balance in the Electronic Credit Ledger
2. ITC availed for the particular tax period
3. Amount entered by taxpayer in refund claim matrix.
Q 75. In case the supplier claims refund on account of deemed export supplies, will the re
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in a prescribed proforma in “Form-A” (appended herewith) bearing a running serial number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made. The said intimation shall be given to –
(a) the registered supplier;
(b) the jurisdictional GST officer in charge of such registered supplier; and
(c) its jurisdictional GST officers.
(ii) The registered supplier thereafter will supply goods under tax invoice to the recipient EOU / EHTP / STP / BTP unit.
(iii) On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to –
(a) the registered supplier;
(b) the jurisdictional GST officer in charge of such registered supplier; and
(c) its jurisdictional GST officers.
(iv) The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU / EHTP / STP / BTP u
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he above procedure and safeguards are in addition to the terms and conditions to be adhered to by a EOU / EHTP / STP / BTP unit in terms of the Foreign Trade Policy, 201520 and the duty exemption notification being availed by such unit.
Q 77. What is the relevant date for filing of refund claim in case of deemed exports?
Ans. The relevant date is the date of on which return relating to such deemed exports is furnished. The claim needs to be filed within 2 years from this date.
Q 78. What are the conditions subject to which supply of goods ( to merchant exporters ) at concessional rate may be made?
Ans. Supplies at concessional rate of 0.1% can be made subject to compliance with conditions mentioned in notification no. 40/2017-Central Tax (Rate) dated 23.10.2017. (Corresponding IGST notification no. 41/2017-Integrated Tax (Rate) dated the 23rd October, 2017,) The conditions are as under
(i) the registered supplier shall supply the goods to the registered recipient on a tax in
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said goods are to be exported; or
(b) directly to a registered warehouse from where the said goods shall be moved to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported;
(vii) if the registered recipient intends to aggregate supplies from multiple registered suppliers and then export, the goods from each registered supplier shall move to a registered warehouse and after aggregation, the registered recipient shall move goods to the Port, Inland Container Deport, Airport or Land Customs Station from where they shall be exported;
(viii) in case of situation referred to in condition (vii), the registered recipient shall endorse receipt of goods on the tax invoice and also obtain acknowledgement of receipt of goods in the registered warehouse from the warehouse operator and the endorsed tax invoice and the acknowledgment of the warehouse operator shall be provided to the registered supplier as well as to the jurisdictional tax
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ave not been procured under the said notification?
Ans. Yes. Rule 89(4B) of the CGST Rules stipulates that in the case of supplies received on which the supplier has availed the benefit of the notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017 or notification no. 41/2017-Integrated Tax (Rate) dated the 23rd October, 2017 or notification No. 78/2017-Customs dated the 13th October, 2017 or notification No.79/2017-Customs dated the 13th October, 2017 or all of them, refund of input tax credit, availed in respect of inputs received under the said notifications for export of goods and the input tax credit availed in respect of other inputs or input services to the extent used in making such export of goods, shall be granted.
Thus, a merchant exporter (recipient) can claim refund of ITC in respect of supplies on which the supplier has availed benefit of notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017 (at concessional rate of 0.1%). This entire
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can the supplier to merchant exporter claim refund, since such supplies will not be considered as zero rated supplies?
Ans. The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure as per the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act read with Rule 89(5) of the CGST Rules.
Q 82. Is the scheme of making supplies to merchant exporters at concessional rate of duty in terms of notification 40/2017-Central Tax (Rate) dated 23.10.2017 compulsory?
Ans. No. The benefit of supplies at concessional rate is subject to certain conditions and the said scheme is optional. The option may or may not be availed by the supplier and / or the recipient and the goods may be procured at the normal applicable tax rate.
Q 83. Can the merchant exporter export goods (in respect of which concessional rate of duty is availed by the supplier) on payment of IGST and claim refund of IGST?
Ans.
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2017].
Thus, refund of compensation Cess (if its on account of zero rated supplies) will be admissible to the claimant. The process and procedure for claim of such refund will be same as for refund of IGST (on both goods and services) and in respect of accumulated ITC of compensation cess.
Further, in cases of unutilised ITC of compensation cess availed on inputs in cases where the final product is not subject to the levy of compensation cess, it has been clarified vide circular no. 45/19/2018-GST dated 30th May 2018, that refund of accumulated ITC can be claimed in such situations, however the rebate route i.e. payment of IGST and claiming refund of compensation cess of IGST paid will not be permissible in in such cases. In such cases they cannot utilise the compensation cess paid on inputs for payment of IGST in view of the proviso to section 11(2) of the Cess Act, which allows the utilization of the input tax credit of cess, only for the payment of cess on the outward supplies. Ac
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Section 77 of CGST Act, 2017, read with Section 19 of IGST Act, are the enabling provisions for grant of refund in such cases. These provisions use the words “………..shall be granted refund of the amount of Central/integrated tax so paid in such manner and subject to such conditions as may be prescribed….” Thus, refunds will have to be mandatorily granted. The stipulation in Section 54(1) that claims will have to be filed within 2 years from the relevant date, will not apply for a claim under this category.
Q 88. Interest on delayed payment (if refund is not paid within 60 days from the date of receipt of application) will be paid right from the first date of receipt of claim till the date of payment. Is this statement true?
Ans. As per section 56 of CGST Act, 2017, If any tax ordered to be refunded under section 54(5) to any applicant is not refunded within sixty days from the date of receipt of application under section 54(1), interest at such rate not exceeding six per cent
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refunds arising as a consequence of finalisation of provisional assessment?
Ans. Such claims need to be filed within 2 years from the date of adjustment of tax after the final assessment thereof.
Q 91. What documents need to be submitted along with the claim of refund (for refunds arising as consequence to finalization of provisional assessment)?
Ans. The Refund claim needs to be filed in GST RFD-01A on the common portal accompanied by the following documents
(a) the reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of the finalisation of provisional assessment;
(b) a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees:;
(c) a Certificate in Annexure 2 of FORM GST RFD-01A issued by a chartered accountant or a cost accountant to the effect that
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ability will arise for Revenue.
The position would be different in case of refund of pre-deposit. For refund of amounts paid as pre-deposit (in terms of Section 107(6) & 112 (8)) interest liability will arise in terms of Section 115 of the CGST Act. As per Section 115 of CGST Act, where an amount paid by the appellant under sub-section (6) of section 107 or sub-section (8) of section 112 is required to be refunded consequent to any order of the Appellate Authority or of the Appellate Tribunal, interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount. Thus, interest liability starts from the date of making of payment (and not the date of filing of application for refund) in the case of amounts paid as pre-deposit.
Q 94. What are the documentary evidences that need to accompany the refund claim, in cases where the claim arises a consequence of any court order or judgement?
A
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ed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees:
Q 95. What is unjust enrichment. Does the concept apply in GST?
Ans. The Hon'ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. v/s Commissioner of Central Excise & Customs as reported in 2005 (181) ELT 328 S.C. = 2005 (3) TMI 116 – SUPREME COURT OF INDIA has defined 'unjust enrichment' as under:
(a) 'Unjust enrichment' means retention of a benefit by a person that is unjust or inequitable. 'Unjust enrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.
(b) That no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of 'unjust enrichment' arises where retention of a benefit is considered contrary to justice or against equity
The concept is inbuilt in Section 54(5) read with 54(8) of the CGST Act, 2017. Ever
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monstrate non-passing of incidence of tax to any other person?
Ans. Rule 89(2) (l) & (m) deals with documentary evidence pertaining to passing of incidence of tax. In cases where the amount of refund claim does not exceed ₹2,00,000/- a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, Where the claim exceeds ₹2,00,000/- a Certificate in Annexure 2 of FORM GST RFD-01A issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person However, the aforesaid declaration/certificate is not required to be furnished in respect of cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of section 54 (8). That is for cases covered by clause a to d & f of Section 54, since by default the doctrine of unjust enrichment does not apply, there is n
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