Refund of GST paid (which should not have been paid)

[Tanmay Bhardwaj]

Hi Experts,

Need you opinion on following:

We are a liaison office of foreign establishment. In GST, an establishment in India (liaison office) and an establishment outside India (head office) of establishment, are treated as establishment of distinct persons in terms of Explanation 1 to Section 8 of the IGST Act. Accordingly, service provided by liaison office to head office are excluded from the scope of “export of services” by virtue of sub-clause (v) in definition of ”export of services” provided in Section 2(6) of the IGST Act. Accordingly, we paid GST on reimbursement received from our HO.

Recently, Rajasthan Authority for Advance Ruling in case of Habufa Meubelen B.V. Indian Liaison Office 2018 (7) TMI 883 - AUTHORITY FOR ADVANCE RULING - RAJASTHAN held that no GST is required to be paid on reimbursement received by Liaison office from HO.

In view of the above, can we file refund of the GST already paid and if yes, under which section of CGST Act?

Thank you in advance for your help.

[Rajagopalan Ranganathan]

Sir,

Advance Ruling is applicable to the party who seeks advance ruling from AAR. Other parties have to approach the AAR and to obtain a favourable ruling and then only can apply for refund.

According to Section 103 of CGST Act, 2017 -

"(1) The advance ruling pronounced by the Authority or the Appellate Authority under this Chapter shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of section 97 for advance ruling; (b) on the concerned officer or the jurisdictional officer in respect of the applicant. (2) The advance ruling referred to in sub-section (1) shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed."

[DR.MARIAPPAN GOVINDARAJAN]

You cannot get refund on the basis of the order of Authority for Advance Rulings in another case. As clearly explained by Shri Rajagopalan sir it is binding only on the applicant and it is not in rem.

[Tanmay Bhardwaj]

Dear Experts

Thank you for reply.

I understand that refund would not be possible on basis of advance ruling obtained by other party but is there any other way by which i can take refund of GST paid to Government which was not required to be paid.

[DR.MARIAPPAN GOVINDARAJAN]

You can get refund of GST paid which is not payable by you. The onus is on your part that the tax is not payable by you.

[Tanmay Bhardwaj]

Dear Sir

Are we required to file application to jurisdictional GST authorities seeking clarification on the same. Is any procedure prescribed under GST law.

[Ganeshan Kalyani]

Refund provision is given in Sec 54 of CGST Act, 2017.

AI Summary

Refund of GST: reimbursements to a head office may be reclaimed if taxpayer proves the tax was not payable under GST law. Reimbursements from a head office to a liaison office were taxed by the taxpayer, but an AAR decision in another case held such reimbursements not taxable; that AAR is binding only on its applicant and cannot be relied on by other taxpayers. A refund of GST paid which was not payable is available under the CGST Act refund provisions, but the claimant must prove that the tax was not exigible and may seek its own binding determination or approach the jurisdictional authorities under the refund procedure.