Goods And Service Tax - Refund for export of goods without payment of tax

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my client has ITC ledger balance of ₹ 36,58,471/- pertaining to F.Y. 2017-18. He has claimed refund for the period July-December 2017 as below:

Turnover of Zero rated sales/Adjusted Turnover*Net ITC

1,06,379/33,12,748 * 27,85,461 = 89,447/-

During the above period, the ITC was huge,however, proportionate Zero rated sales was very low.The sale pertaining to the ITC mentioned above was made during Febuary 2018.

Therefore, now we are filing refund for Jan-Mar 2018 as follows:

2,32,54,500/2,98,10,877*4,68,759 = ₹ 3,65,664/-

We are unable to claim refund of ₹ 22,00,000/- (approx) in the above case as the Net ITC for the period Jan - March 2018 comes to ₹ 4,68,759/- only and the carry forward of balance pertaining to July-Dec 2017 doesn't get reflected.

Please let us know the possibilities for claiming the ITC.

Thanks in advance.

[Rajagopalan Ranganathan]

Sir,

Refund of ITC can be claimed in respect of inputs contained in zero rate supply according to value of zero rated supply. If zero rated supply is less then only proportionate ITC can be claimed as refund. Since you have huge credit balance please verify whether rate of tax on final products is less then rate of tax on inputs. If it is the case you can claim refund on the ground of inverted tax structure.

[SENTHIL VEL]

It is suggested to club the 2nd and 3rd quarter and file a consolidated refund claim for the period Oct 17 to March 18, wherein based on the above formula, you would gain by claiming an additional refund amount of ₹ 22.00 lakhs.

[SHARAD ANADA]

GST Refund Period can be Spread over Two Financial Years refer Pitambra Books Pvt. Ltd. Vs Union of India & Ors. (Delhi High Court); W.P.(C) 627/2020; Dated: 21/01/2020 = 2020 (2) TMI 169 - DELHI HIGH COURT

[Kashish Gupta]

In the present case, you have been encountered with a situation where purchases were made in one tax period and exports are made in subsequent tax periods. In this regards, you may refer judgment of Delhi HC in case of AC Impex and PC Universal = 2019 (5) TMI 1510 - DELHI HIGH COURT wherein facts were same.

As per my advice, you should have created one claim for FY 2017-18. Since the same has been filed now and there is no other option left since only one refund application can be created for one tax period as per portal restrictions, you may create a claim under the category "Any Other" with a suitable letter drafted to support the claim. Government has understood these problems and therefore recognised this procedure vide Circular No. 110/29/2019-GST dated 03.10.2019. Though your case doesn't get covered by this circular, but your right to claim refund cannot be done away. Further, since it related to February 2018, I advise you to lodge the application immediately as relevant period of 2 years must also be about to expire.

AI Summary

GST refund for export without tax: claim proportionate or inverted-tax relief, consolidate periods or use 'Any Other' claim Refundable input tax credit for exports without payment of tax is limited to the proportionate ITC attributable to zero rated supplies; alternatively, claimants may seek relief under an inverted duty structure when input tax rates exceed output rates. To address credits arising in earlier periods, taxpayers may consolidate adjacent tax periods or use an 'Any Other' claim category due to portal restrictions, supporting the filing with an explanation and relying on administrative guidance and relevant judicial precedents. Prompt filing is essential where limitation periods approach, and computations must reflect the ratio of zero rated turnover to adjusted turnover and net ITC.