Amount Recd in INR

[Balaji Biradar]

Dear Sir,

Our head office in UK transferred funds to TransferWise UK and they converted pound in UK to INR and transfered through their vostro account maintained with HDFC bank in India in INR. Officer has rejected our refund saying foreign credit advice is not acceptable. We raised the issue with transferwise UK Ltd and HDFC India and we got this answer from the banker.

With reference to your mail request seeking our confirmation regarding credit in your account. We (HDFC) would wish to clarify that the said remittance was received in INR currency and executed on basis of remittance request received from TRANSFERWISE LTD, UNITED KINGDOM through their Vostro account held with us. We have received the inward remittance in INR currency from TRANSFERWISE LTD, UNITED KINGDOM and foreign currency conversion has been taken care by them. As per arrangement/instructions the funds were credited to your account XXXX held with STANDARD CHARTERED BANK. The details of transactions are mentioned below, Beneficiary Name – XYZ PRIVATE LIMITED Remitter Name - XYZ Ltd.

Can we take help of the Circular no : 88/07/2019-GST where it is allowed. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan”

We need to file the appeal against the refund rejection order.

Your Suggestion on the above would be of great help.

Thank you in advance sir.

[KASTURI SETHI]

Board's circulars are binding on the department------ held by the Supreme Court. If you fulfill the conditions laid down in RBI' s circular, you must go ahead.

[KASTURI SETHI]

Realization of foreign exchange is required in case of export of goods w.e.f. 23.3.2020. Board's Circular No.88/07/2019-GST dated 1.2.19 does not apply for refunds after 23.3.2020.

[Balaji Biradar]

Dear Sir,

We are into Export of services. As you said Circular No:88/07/2019-GST will not apply for export of goods after the said date will this same applies to Export of Service.

In one the queries i read that personal hearing should be given thrice as per Sec 75(5) , can we contend the same in Appeal?

[KASTURI SETHI]

Yes. You can contest. Where tax or refund of tax is involved, three opportunities for personal hearing are to be granted under Section 75(5) of CGST Act. This is applicable in your case also. If any case is decided without granting three opportunities personal hearing, that will be in violation of principles of natural justice.

So go ahead, if you think your case is strong on merits. First be doubly sure whether you conform to the parameters laid down in this aspect. (especially RBI's conditions/circulars).

AI Summary

Realization of foreign exchange: refunds may be denied unless RBI conditions met; three hearings under Section 75(5) protect procedural rights. Export of services remittances credited in INR via a non-resident bank's Vostro account may be contested for GST refund purposes where currency conversion occurred abroad; Circular No.88/07/2019-GST permits realization in rupees through freely convertible Vostro accounts subject to RBI conditions but its applicability to refunds after 23 March 2020 is restricted. Taxpayers should ensure conformity with RBI requirements and may assert entitlement to three personal hearing opportunities when contesting refund rejections.