Refund of IGST paid on goods exported where goods are subject to Export Duty

[Sandeep Mukherjee]

As per the second proviso to Section 54(3) of the CGST Act, 2017, no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty. However, I have not come across any such restriction in refund of IGST paid on the export of the said goods.

Does this mean that in case of goods subjected to export duty, instead of claiming refund of unutilized ITC, one should export by paying IGST and claim refund of such IGST paid?

[KASTURI SETHI]

Answer is NO.

Goods which are subjected to export duty cannot be called 'zero rated supply'. There are some goods on which actually export duty is leviable and duty has to be paid at the time of export. It is in contrast to the definition of 'zero rated supply'.

In this context, Read serial no.3 of Circular No. 160/16/2021-GST, dated 20-9-2021

[Amit Agrawal]

I respectfully differ with Shri Kasturi Sethi Ji!

Answer to raised query is YES, in my humble view.

For falling under zero-rated supply u/s 16 of the IGST Act, 2017, 'goods exported out of India being subjected to export duty or not' is NOT a relevant factor.

Currently, there is no restriction under GST law to export goods (which are subjected to export duty) with payment of taxes under claim of refund u/s 16 (3) (b) of the IGST Act, 2017 read with Rule 96 of the CGST Rules, 2017.

Of course, in such a scenario, you cannot claim refund of unutilised ITC in view of the second proviso to Section 54(3) of the CGST Act, 2017 as rightly pointed by yourself.

Lastly, kindly note that facility to export goods (whether same are subjected to export duty or not) with payment of taxes under claim of refund u/s 16 (3) (b) of the IGST Act, 2017 read with Rule 96 of the CGST Rules, 2017 is expected to be withdrawn soon in view of substitution done vide THE FINANCE ACT, 2021 dated 28-03-2021(which is not yet operationalised but same is expected to be operationalised soon).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

"Of course, in such a scenario, you cannot claim refund of unutilised ITC in view of the second proviso to Section 54(3) of the CGST Act, 2017 as rightly pointed by yourself."

I agree with the above view of Sh.Amit Agrawal Ji.

Regarding the last para of above reply by Sh.Amit Agrawal Ji, my humble opinion is that we should be concerned with present position of law as it exists today.

The exporter is concerned with the refund claim today as per present position of law.

[Amit Agrawal]

@ Shri Kasturi Sethi Ji,

My last Para was for information purpose of the Querist, so that he can use window (which is expected to be closed soon) to liquidate "accumulated ITC till date", by exporting goods (which are subjected to export duty) with payment of taxes under claim of refund u/s 16 (3) (b) of the IGST Act, 2017 read with Rule 96 of the CGST Rules, 2017.

As this facility of getting refund (by liquidating accumulated ITC) is expected to be closed soon and there is risk that the Querist may be saddened with lot of accumulated ITC (without option left to claim its refund, once current facility gets closed), I felt it right to highlight the urgent need to use the facility currently so available.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Shilpi Jain]

Agree that in such a scenario export of goods with payment of tax and claiming refund should be permissible.

[Amit Agrawal]

In continuation of my last 2 post above at serial No. 2 & 4, please note the following recommendations of 50th meeting of GST Council, as per press release dated 11.07.2023:

"provisions of section 123 of Finance Act, 2021, amending section 16 of IGST Act, to be notified with effect from 01.10.2023 and notification to be issued under section 16(4) of IGST Act. 2017 to provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items as well as mentha oil"

This is for information purpose of the Querist, so that he can use window (which is closed from 01.10.2023 onwards) to liquidate "accumulated ITC till date", by exporting goods (which are subjected to export duty) with payment of taxes under claim of refund u/s 16 (3) (b) of the IGST Act, 2017 read with Rule 96 of the CGST Rules, 2017.

As this facility of getting refund (by liquidating accumulated ITC) will be closed w.e.f. 01.10.2023 and there is risk that the Querist may be saddened with lot of accumulated ITC (without option left to claim its refund, once current facility gets closed), I felt it right to highlight the urgent need to use the facility currently so available.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

My last post above is subject to the 'Note' (as given at the end of above-said Press Release), which reads as follows:The recommendations of the GST Council have been presented in this release containing major item of decisions in simple language for information of the stakeholders. The same would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Kindly refer to Notification No. 01/2023 – Integrated Tax dated 31.07.2023, where, w.e.f. 01.10.2023, EXCEPT the 'goods' specified in said notification, all other goods & every service can STILL be exported on payment of integrated tax and on which the supplier of such goods or services can claim the refund of tax so paid.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

AI Summary

IGST refund on exports: exporters may pay IGST and claim refund despite export duty, subject to notified restrictions. The proviso to the CGST refund provision prevents refund of unutilised input tax credit for exports of goods subject to export duty, but that does not per se bar exporters from paying IGST on such exports and claiming refund of the IGST under the IGST Act and refund rules. Views differ on whether goods subject to export duty qualify as zero-rated supplies; recent legislative amendments and notifications have imposed notification-based restrictions narrowing the IGST-payment refund route for specified goods, making the availability of the refund route dependent on current notifications and GST Council recommendations.