Refund of IGST Charged and collected from Foreign Customer on Export of Service transaction

[g srikanth]

If a company has collected GST from a foreign customer for an export of service transaction, with separate mention on the invoice, and subsequently remitted this amount to the government, can it be eligible for a refund under section 54 of the GST Act?

[Amit Agrawal]

Yes. Reference: Section 54(8)(a) of the CGST Act, 2017

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

[Raam Srinivasan Swaminathan Kalpathi]

Your words "Can it be eligible for refund" is not clear.  Are you talking about the foreign customer or the exporter of services.  The exporter of services has COLLECTED tax from the foreign customer - meaning thereby it would amount to unjust enrichment if the exporter of services seeks refund of this amount from the department. Once IGST is collected there is no option but to remit the amount to the department.  What was collected was "tax" and I am of the humble opinion that any claim of refund will be contested by the department.

The other option is, the foreign customer can seek refund of this amount which is possible considering Section 54(1) - "Any person claiming refund".  Person is defined in Sec.2(84) which includes a foreign body corporate (clause (h)).  The foreign customer can apply for refund manually as provided in Rule 97A.  Also, there is a favourable Bombay HC on similar facts wherein the foreign customer applied to the department seeking refund of the IGST paid by the exporter.

[Shilpi Jain]

The provision relating to unjust enrichment is not applicable for exports.

However, I would suggest that you rectify the invoice to remove the GST as a separate line item to ensure that there is smoother processing of refund claim.

[Raam Srinivasan Swaminathan Kalpathi]

Madam Shilpi is correct.  The concept of unjust enrichment is not applicable to exports.  I stand corrected.  Nonetheless, how will the company who has collected the 'GST amount' apply for refund?   

[Shilpi Jain]

As i had mentioned, they need to rectify the invoice as per which no GST amount should be visible on the face of the invoice.

[Raam Srinivasan Swaminathan Kalpathi]

With due respects to the opinion of Madam Shilpi, I am comprehensively in disagreement on account of the following points.

1)  How is it possible to remove the GST amount and arrive at the same value of supply?  It is a mathematical impossibility.  However much one tries there will be a fringe amount outstanding.

2)  I am still of the opinion that if any person is eligible for refund it is only the service recipient and not the person who has already COLLECTED and remitted IGST.

AI Summary

Company Debates GST Refund Eligibility for Export Services Under Section 54 of CGST Act, 2017; Unjust Enrichment Concerns Raised. A company queried whether it could claim a refund of GST collected from a foreign customer for an export of service transaction. One participant affirmed eligibility under Section 54 of the CGST Act, 2017, while another argued that seeking a refund could lead to unjust enrichment since the tax was already collected and remitted. They suggested that the foreign customer could apply for a refund. Another participant advised rectifying the invoice to exclude GST for smoother refund processing, though this advice was contested due to potential mathematical discrepancies in adjusting the invoice.