GST Refund amendment of section 54(8)(a) impact

[Pankaj Agarwal]

What shall be the impact Substitution by Central Goods and Services Tax (Amendment) Act, 2018 w.e.f. 01-02-2019 before it was read as "zero-rated supplies" in section 54(8)(a) of GST Act?

Earlier it read as:

Section 54

"(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to-

(a) refund of tax paid on zero-rated suppliesof goods or services or both or on inputs or input services used in making such zero-rated supplies;..

"

It is substituted as:

Section 54

"(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to-

(a) refund of tax paid on ¹[export] of goods or services or both or on inputs or input services used in making such ¹[exports];

.."

Please guide

[Shilpi Jain]

Supplies to SEZ will have to prove the fulfillment of the condition of unjust enrichment after the amendment.

However in case of exports that is not required.

[KASTURI SETHI]

Difference between both legal terms

Zero rated supply is tax free but 'exported' implies duty paid. Hence supply to SEZ is not hit by the principles of unjust enrichment.

This existed in pre-GST era also.

[Shilpi Jain]

SEZ supplies also will require proving that you have not collected tax from SEZ since SEZs are eligible for credit.

So certificate will be required.

[Padmanathan KV]

I concur with the views of Shilpi Ma'am.

Section 54(8) of CGST Act enumerates the cases where the principle of unjust enrichment does not apply for the purposes of payment of refund. Earlier, zero-rated supplies of goods or services was one such case.

According to Section 16(1) of IGST Act, 'zero-rated supply' includes both exports of goods or services, and supplies made to an SEZ unit or SEZ developer. 

Now, as per the amended section 54(8), the principle of unjust enrichment will not apply only in case of refund claim arising out of export of goods or services. 

[Shilpi Jain]

SEZ are taxpayers under GST.

They can also claim credit. Hence, it is required to be proved that for supplies made to SEZ the supplier has not received the GST portion in the invoice.

[Shilpi Jain]

If the supplier has received GST from the SEZ recipient then he cannot claim another benefit by claiming refund.

[Raveendran PM]

In current case,  Officer insisting  for  CA certificate  and   TP declaration  for  Zero rated supply - Jul-2020 to Mar-2021 period .  

AI Summary

Unjust enrichment exception limited to exports, requiring proof for refunds on supplies to SEZs to avoid denial.
Amendment substituting "export" for "zero-rated supplies" in the refund provision confines the unjust enrichment exception to exports only, so refunds for supplies to SEZs must be supported by proof that GST was not collected from the SEZ recipient or that the recipient did not claim input tax credit; suppliers should maintain invoices, recipient declarations, and professional certifications as evidence.