Regarding Guidelines for Refund Processing under the HGST Act -Standard Operating Procedure for manual application and processing.
1645\/GST-III, 1646\/GST-III, 1647\/GST-III Dated:- 25-5-2018 Haryana SGST
GST – States
Excise & Taxation Commissioner,
\nHaryana, Panchkula.
\nMemo No. 1645\/GST-III,
\ndated: 25-05-2018
\nOrder
\nSubject: Regarding Guidelines for Refund Processing under the HGST Act -Standard Operating Procedure for manual application and processing.
\nMEMORANDUM
\nPlease find enclosed herewith a copy of guidelines regarding refund under HGST Act -Standard Operating Procedure for manual application and processing on the basis of various relevant provisions under HGST Act, Rules, Notifications and Circulars. It is requested to bring this to the knowledge of all the assessing authorities working under your control for their information and necessary action.
\nEndst. No. 1646 GST-III, Panchkula, dated the 25-05-2018
\nA copy alongwith a copy of guidelines regarding refund under <\/p>\n
= = = = = = = =<\/p>\n
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\napplication and processing
\nPrepared by:
\nExcise & Taxation Department
\nGovt. of Haryana
\nINTRODUCTION
\nEfficient Processing of refunds is extremely critical for any tax
\nadministration in view the fact that any inefficiency in relation thereto may
\nstress the capital inflow of the whole economic cycle. On the other hand, it is
\nimperative upon the tax authorities to exercise utmost vigil while processing
\nthe refund applications so that the public exchequer is not imperiled.
\nGST is a technological driven tax administration and is still at a very
\nnascent stage of implementation. Feedbacks from various quarters keep
\npouring in regarding difficulties being faced by the various stakeholders in
\nits implementation. Taxing authorities of the state, in particular, are seeking
\nguidance and clarifications on various issues related to the provisions of the
\nlaw for effective processing of the refund applications and the procedure
\nassociated thereto. Hence these guidelines.
\nTh<\/p>\n
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\ntabulated as under:-
\n(i) Export of Goods or Services or both
\n(ii) Supplies of Goods or Services or both to SEZs units and SEZ
\ndevelopers
\n(iii) Deemed Export supplies
\nPage 2
\n(iv) Refund of accumulated Input Tax Credit on account of zero-
\nrated supplies or inverted duty structure
\n(v) Refund arising on account of judgment, decree, order or
\ndirection of the Appellate Authority, Appellate Tribunal or any
\ncourt
\n(vi) Excess payment due to mistake
\n(vii) Refund of pre-deposit
\n(viii) Refund of CGST & SGST paid by treating the supply as Intra-
\nState supply which is subsequently held as Inter-State supply
\nand vice versa.
\n(ix) Refund on account of issuance of refund vouchers for taxes paid
\non advances against which goods or services have not been
\nsupplied
\n(x)
\nFinalisation of provisional assessment
\n(xi) Refund of taxes on purchase made by UN or embassies etc
\n(xii) Refunds to International tourists of GST paid on goods in India
\nand carried a<\/p>\n
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\noutside India
\nAny refund related to balance lying in electronic cash register in
\naccordance with sub-section 6 of section 49 can be made through return
\nfurnished for the relevant period.
\nAll applications for refunds have to be filed within two years of the
\nrelevant date.
\nThe application for refund should be accompanied by such
\ndocumentary evidence which establishes that: (i) the refund is due to the
\napplicant and, (ii) to the effect that refund claimed by the applicant was
\ncollected from, or paid by, him and the incidence of such tax and interest has
\nnot been passed on to any other person.
\nB. Submission of the Application:
\nThe application for refund shall be filed in FORM GST RFD-01A on
\ncommon portal. The print-out of the application form RFD-01A, as submitted
\non the national portal, shall be submitted manually to the jurisdictional
\nProper Officer with all the necessary documentary evidences within the
\nstipulated time.\n<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\nprocessing of refund application shall be counted from such date.
\nIn case where the refund relates to claim arising from electronic cash
\nregister, an acknowledgment GST RFD-02 shall be issued online from the
\nportal itself.
\nIn all other cases (other than seeking refund from electronic cash
\nledger), the Proper Officer shall examine the application in form GST RFD-
\n01A for its completeness in terms of sub-rule (2), (3), (4) of Rule 89. The
\nProper Officer shall validate the GSTIN details on the portal to see whether
\nreturn has been filed. A declaration has to be filed by the claimant to the
\neffect that no refund has been claimed against the relevant invoices. This
\nprocess of examination of GST RFD-2 has to be completed within a period of
\n15 days of filing the application. If the application for refund GST RFD-01A is
\nfound to be complete as described above, the acknowledgment, GST RFD-02
\nshall be issued.
\nIn case, any deficiency is noted in the course of examination with
\nr<\/p>\n
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\nhas to be paid within seven days after giving the acknowledgement, GST RFD-
\n02.
\nThe persons who have been prosecuted in the last five years for any offence
\nunder the GST law or any other law subsumed in GST, for an amount
\nexceeding 2.5 Crore, are not eligible for provisional refund.
\nThe Proper Officer shall examine the application and on being prima
\nfacie satisfied that the amount of refund claimed by the applicant is due to
\nhim, shall make an order in the FORM GST RFD-04 sanctioning the
\nprovisional refund within a period not exceeding seven days from the date of
\nGST RFD-02.
\nThe amount of provisional refund shall be calculated by taking into
\naccount total ITC without making any reduction for credit being provisionally
\naccepted.
\nThe Proper Officer shall also issue a payment advice in the form GST
\nRFD-05 for the sanctioned amount which shall be credited electronically to
\nany of the accounts of t<\/p>\n
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\nPage 6
\napplicant may respond to this notice by furnishing a reply in FORM GST RFD-
\n09 within 15 days of receipt of notice.
\nSo, it is advised that Show Cause notice in form GST RFD-08, if
\nrequired, be issued within a period of 35 days of date of GST RFD-02 so that
\nwhole process is completed well within the time limit of 60 days.
\nThe Proper Officer shall pass an order in FORM GST RFD-06, after
\nconsidering his reply, sanctioning the amount of refund in whole or part, or,
\nrejecting the said refund claim.
\nThe amount of provisional refund shall be adjusted accordingly.
\nIn case, Proper Officer is satisfied that the amount of refund is not
\npayable to the applicant under the provisions laid down under section 54(8),
\nthe sanctioned amount of refund shall be credited to the consumer welfare
\nfund (CWF).
\nIn case where Proper Officer is satisfied that the amount of sanctioned
\nrefund relates to applicant under the provisions of section 54(8), the
\nsanctioning order in form GST RFD-<\/p>\n
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\nIntegrated tax, Cess shall be made by Central tax authorities and in relation to
\nstate tax by the State tax authorities. So, the refund orders issued by the State
\nPage 7
\ntax authorities or the Central tax authorities shall be communicated to the
\ncounterpart concerned tax authorities within seven days for the purpose of
\npayment of the relevant sanctioned amount of refund.
\nIt should be ensured that the timeline specified under section 54(7) of
\nthe GST law (60 days) and the Rule 91(2) of the GST rules( 7 days for
\nprovisional refund) be adhered to.
\nF. Withholding of Refunds:
\nRefund amount found due to any applicant can be withheld under the
\nprovisions of sub section (10) or (11) of section 54 of GST law. A refund
\namount of any person can be withheld if he has defaulted in furnishing any
\nreturn or has not paid any amount of tax, interest or penalty which has not
\nbeen stayed by any court, Tribunal or Appellate Authority. Refunds in this
\nc<\/p>\n
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\nA. Refunds arising from Zero-Rated Supplies
\nThe refunds arising from zero rated supplies constitute one of the
\nmajor categories of refunds. Zero rated supply has been defined under
\nSection 16 of the Integrated Goods and Services Tax Act, 2017. Zero rated
\nsupply includes supplies of goods or services or both in the course of export
\nand to Special Economic Zone (SEZ) Developer or Special Economic Zone
\nUnit.
\nPage 8
\nThe supplier of zero rating supplies will be entitled to claim input tax
\ncredit in respect of supply of goods or services or both even though the
\nsupplies might be non-taxable or exempted supplies.
\nEvery supplier making zero rated supplies has two options: (i) either
\nhe can make his supplies under bond\/LUT and claim refund on accumulated
\ninput tax credit; or (ii) he can make his supplies on payment of integrated tax
\nand claim refund thereof.
\nGST law also provides for grant of provisional refund amounting to
\n90% of the total refund claimed by applicants<\/p>\n
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\n(v) Supply of goods or services or both to SEZ Developers or SEZ
\nUnit without payment of Integrated tax under Bond\/ LUT
\n(i) Export of services outside India on Payment of Integrated Tax: In this
\ncase, the supplier will first pay integrated tax on his supplies of services
\noutside India in the course of export. The supplier is entitled to refund of
\nthe amount of integrated tax paid on such supplies. The applicant will file
\nhis application in form GST RFD-01A along with the statements containing
\nnumber and date of invoices and relevant Bank Realization Certificate
\n(BRC) or Foreign Inward Remittance Certificate (FIRC). The statement has
\nPage 9
\nbeen prescribed as Statement 2 attached with GST RFD-01A. The receipt
\nof payment by the supplier in foreign convertible exchange is
\nprerequisite for supply of service in the course of export.
\nExport of Services) with
\npayment of tax (Refund of IGST
\npaid on export of services)
\nCopy of FORM GST RFD-01A filed on
\ncommon portal
\nCo<\/p>\n
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\nIn case of supply of goods, a statement containing number and date
\nof invoice along with evidence regarding endorsement of Specified
\nOfficer of the Zone to the effect that goods have been admitted in
\nSEZ for authorized operations
\n\u00e2\u0161\u00ab In case of supply of services, a statement containing number and
\ndate of invoice along with evidence regarding endorsement of
\nSpecified Officer of the Zone to the effect that services have been
\nPage 10
\nreceived in SEZ for authorized operations and the details of
\npayment and the proof therof
\nStatement 4 attached with GST RFD-01A has been prescribed for such
\npersons.
\n(iii), (iv) & (v) Refund of Unutilized Credits of Inputs and Input Services
\non account of Zero-rated supplies: The refund of unutilized credits of
\ninput and input services on account of zero-rated supplies shall arise
\nwhen supplies of goods or services are made without making payments of
\nIntegrated tax in the course of export o<\/p>\n
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\nIn case the amount of refund exceeds Rs.2 lakh, a certificate to the effect
\nthat incidence has not been passed on to any other person issued by CA
\nshould be submitted by the applicant along with his application.
\nProvisional refunds shall be granted in such cases as has been explained in
\nthe foregoing paras.
\nThe amount of refund in these cases shall be computed by formula
\nexplained here as under:
\nPage | 11
\nRefund Amount = (Turnover of Zero -rated supply of
\nGoods + Turnover of Zero-rated supply of services) X Net
\nITC\/Adjusted Total Turnover.
\nWhere,-
\n“Refund amount” means the maximum refund that is admissible;
\n“Net ITC” means input tax credit availed on inputs and input services
\nduring the relevant period other than the input tax credit availed for
\nwhich refund is claimed under sub-rules (4A) or (4B) or both of Rule
\n89 of the GST Rules;
\nExplanation: Sub-rule (4A) of rule 89 of GST Rules provides that a
\nperson (the supplier<\/p>\n
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\npayment of tax under bond or letter of undertaking, other than the
\nturnover of supplies in respect of which refund is claimed under sub-
\nrules (4A) or (4B) or both;
\n“Turnover of zero-rated supply of services” means the value of
\nzero-rated supply of services made without payment of tax under
\nbond or letter of undertaking, calculated in the following manner,
\nnamely: Zero-rated supply of services is the aggregate of the
\npayments received during the relevant period for zero-rated supply of
\nPage 12
\nfiled.
\nservices and zero-rated supply of services where supply has been
\ncompleted for which payment had been received in advance in any
\nperiod prior to the relevant period reduced by advances received for
\nzero-rated supply of services for which the supply of services has not
\nbeen completed during the relevant period;
\n“Adjusted Total turnover” means the turnover in a State, as defined
\nunder clause (112) of section 2, excluding –
\n(a) the v<\/p>\n
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\naccount of inverted duty structure is also not admissible in such cases as are
\nnotified by the Government on the recommendation of the Council.
\nPage | 13
\nRefunds of inverted duty structure shall be filed for a tax period on a
\nmonthly basis or quarterly basis for those taxpayers who are filing quarterly
\nreturns for having turnover less than 1.5 Crore.
\nIt is to be ensured that a valid return in form GSTR-3B is filed for the
\nlast tax period before the one in which refund is filed.
\nPersons applying for refunds must give an undertaking to the effect
\nthat the mount of refund sanctioned would be paid back to the Government
\nwith interest in case the requirement of clause (c) of sub-section (2) of
\nsection 16 read with sub-section (2) of section 42 of the GST law, are not
\nfulfilled.
\nClause (c) of sub-section (2) of section 16 read with sub-section (2) of
\nsection 42provies that credit shall be admissible only on payment of tax by
\nthe supplier<\/p>\n
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\nA statement in FORM Statement 5B of GST RFD-01A is required to be
\nfurnished for claiming refund from deemed export supplies.
\nPage 14
\nD. Refund on account of payment of wrong tax
\nRefund is also admissible to persons who happen to make payment in
\nthe wrong account of tax. A person may make payment in the account of
\nintegrated tax whereas it was to be paid in the account of state GST or Central
\nGST and vice versa. Similarly, a person can make payment in the account of
\nCGST whereas it was required to be paid in account of State GST and vice
\nversa. Section 77 of GST laws and section 19 of IGST provide that this amount
\nshall be refunded.
\nHowever, no interest shall be charged and refund shall be allowed
\nwithout subjecting it to the provisions of unjust enrichment.
\nE. Refund from orders, pre-deposits, advances etc.
\nRefund arising from an order of Appellate Authority, Tribunal, or Court
\nshould be accompanied with reference number of the <\/p>\n
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\nadmissible to such persons who have received supplies on which the
\nsupplier has availed of the benefit of deemed export supplies.
\nD. It may be noted that refund of input tax credit, availed only in respect
\nof inputs received under concessional rate of tax of 0.05% each for
\nCentral GST and State GST or 0.1% under Integrated Tax is allowed
\nPage | 15
\nwhen used for making zero rated supplies of goods. However, input tax
\ncredit arising from other inputs or input services used in making such
\nexports shall be allowed.
\nE. No refund of unutilized input tax credit shall be permitted in cases
\nwhere refunds of integrated tax are claimed on the goods or services
\nexported out of India or supplied to SEZ unit or SEZ developer.
\nF. No refund of unutilized input tax credit shall be permitted in cases
\nwhere the goods exported out of India are subjected to export duty.
\nG. It may be noted that exporter of such goods whi<\/p>\n
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\niii) Refund of tax paid on supplies which is not provided, either
\nwholly or partly, and for which invoice has not been issued, or
\nwhere refund voucher has been issued.
\niv) Refund of tax under section 77 of GST law
\nv) The tax and interest, if any, or any other amount paid by the
\napplicant, if he had not passed on the incidence of such tax and
\ninterest to any other person.
\nPage 16
\nvi) The tax or interest born by such other class of applicants as the
\nGovernment may notify on the recommendation of the council.
\nThese guidelines have been prepared on the basis of the provision of
\nGST law, Rules, Notifications and various Circulars to assist the State Taxing
\nAuthorities in due discharge of their duties towards processing of refunds.
\nAll the State Taxing Authorities are advised to carefully go through and
\nunderstand all the provisions relating to GST law, Rules and Notifications
\nmade thereunder as well as Circulars issued by CBIC in relation to refund
\nprocessing. These C<\/p>\n
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