LUT not applied but export of services made

[Harshit Sanghvi]

What can be done now of the client has made export of services stating that he has LUT for Fy 19-20 and while applying for FY 20-21 he got to know that he did not apply for LUT in FY 19-20 and has made export supplies in FY 19-20.. He has received all the proceeds in time. Paying igst and taking refund is one option but it will cost interest. What could be the possible solution other than paying IGST and claiming refund.

[KASTURI SETHI]

Dear Vikash Aggarwal Ji,

Yours is a procedural lapse. No penalty will be imposed. Do not worry. Go through the relevant extract of Board's Circular No. 37/11/2018-GST, dated 15-3-2018:-

 

[Yadav Gmv]

Hi dilip, almost similar situation. I have the LUT for 18-19 and 20-21 but missed to file for 19-20. My client is a large IT services organisation and they are in sez. We have raised zero GST invoices in 19-20 and received all the proceeds.

Now Client is asking us to furnish the LUT for both 19-20 and 20-21.

While checking now we realise that we have LUT for 20-21 but missed to file LUT for 19-20.

Can u kindly guide us on this issue pl?

Thanks,

Yadav GMV

[Yadav Gmv]

Hi kasturi sir, kunal sir, dilip sir and all, quite informative and healthy forum. Firstly Thanks to you all.

My situation as below.

1. Client is in SEZ.

2. I supply resources to my client from 2018 to till date.

3. Since my client is in SEZ, i raised zero invoice.

4. My client has proceased all invoices til date.

5. Now my client is asking me to furnish LUT. I have for 18-19 and 20-21 but unfortunately not for 19-20.

6. Worried what should i do now?

A. Should i try and get LUT from department, offline? Is it possible?

B. If not how should i respond back to my client.

Kinsly pl suggest.

[KASTURI SETHI]

Has the department issued any notice to you or SEZ unit in this regard ?

When the export proceeds have been received and no revenue loss has been caused during the relevant period, what is logic of filing LUT for the past period ? It is just a phobia of the department nothing else. As already detailed above, LUT is not required at this stage.

[Yadav Gmv]

Thank you kasturi sir.

My client at sez has sent an email asking me to submit the LUT document.

Probably could be as part of their audit or documentation process.

I am worried if they will force me to pay the GST since i am unable to furnish the LUT. Is my worry unnecessary?

How should i respond to my client sir?

Thx sir.

[KASTURI SETHI]

Dear Mr.Yadav,

The question of recovery of GST does not arise. In this scenario, GST is not payable, especially, in view of the fact that export proceeds have been received.This is all happening due to lack knowledge. No need to reply such letter or query. Nothing to worry. It is a simply procedural lapse. The department is not sitting idle for such unproductive work. Pl. ensure that such mistake must not be repeated. If you receive any letter from the department regarding imposition of penalty on account of this procedural, post your query in this forum. I shall solve your problem.

[Yadav Gmv]

Dear kasturi sir, thanks so much sir. Really thank u.

Here the email is from my client who is a large IT company operating from SEZ.

My client has asked me to submit the lut sez acknowledgement. Now when i am checking to give we realise the LUT is there only for fy18-19 and fy20-21.

For fy19-20 , the LUT is NOT available. So dont know how to handle with this with my client. Kindly pl suggest sir.

[KASTURI SETHI]

Dear Querist,

See Circular No.37/11/2018-GST dated 15.3.18 as amended.

"4.1. In this regard, it is emphasised that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made."

Para no. 44 of Circular No.125/44/2019-GST dated 18.11.19

"In this regard, it is emphasized that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made."

[Yadav Gmv]

Thank you kasturi sir. This is great.

AI Summary

Export without LUT treated as procedural lapse-zero-rating and refunds may be allowed when exports and foreign exchange receipt are established.
Where export of services is established by documentary proof and realization of foreign exchange, non-filing of a Letter of Undertaking (LUT) is a procedural lapse; administrative circulars permit condonation or ex post facto acceptance of LUT and processing of refund claims, subject to verification of genuineness and facts, though repeated non-compliance may attract departmental action.