Refund as per section 54(8)(e) of CGST ACT 2017

[UDHAYKUMAR KANDASAMY]

What will be the kind of refund can be claimed as per Section 54(8)(e) of CGST ACT 2017?

Can we claim excess credit balance available in the Electronic Credit Ledger can be applied for refund as per the above section?

Please clarify.

[Ganeshan Kalyani]

Sir, please refer sub-section (3) of section 54.

[KASTURI SETHI]

Dear querist,

Answer to Q. No. 1 : Section 54 (8) (e) of CGST Act, 2017 covers the following types of refund claims :-

(i) Balance lying in Electronic Cash Ledger.

(ii) Illegal levy i.e. refund claim arises due to misinterpretation of GST Acts and Rules . misapplication of GST Acts & Rules.

(iii) Unconstitutional levy :: If it is later on at any time it is found that GST was levied unconstitutionally.

(iv) Tax, interest or penalty paid twice i.e. Excess payment.

(v) Any amount which is not tax but paid due to misunderstanding of GST laws.

(vi) Refund arising due to Notification enforced retrospectively.

(vii) Refund arising due to cancellation of order placed.

Answer to query no. 2 : NO

[UDHAYKUMAR KANDASAMY]

Thanks for your reply Sir.

[KASTURI SETHI]

I also agree with Sh.Ganeshan Kalyani, Sir.  Section 54 (3) is to be read with Section 49 (6) of CGST Act.

[Shilpi Jain]

Basically it is any kind of eligible refund in respect of which the applicant has borne the tax and not passed on to anyone else.

[UDHAYKUMAR KANDASAMY]

With respect to Reply Sl No.5 by Shilpi mam, if a registered dealer who has ITC balance in electronic credit ledger on account of taxes paid by him during the course of his business can he claim the refund on the balance of ITC after discharging his output tax liability (In a way that it is otherwise IDS refund)?

One of the GST officer has said that taxes not passed on by a dealer after discharging his output liability can apply for refund. Is it right?

Please clarify.

[KASTURI SETHI]

Dear Querist,

(i) Both Sections 54 (3) and 16 (1) of the CGST Act are to be read conjointly. The purpose of ITC is to be used or intended to be used in the course of business or furtherance of business. It is a condition for availment of ITC except refund allowed in Section 54 (3) (i) & (ii).

"SECTION 16. Eligibility and conditions for taking input tax credit. — (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.

Section 54 Refund of tax

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period :

Provided that no refund of unutilised input tax credit shall be allowed in cases other than —

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:"

[(ii) I do not agree with the GST Officer. The issue of "burden of tax should not be passed onto the buyer" (unjust enrichment) will arise only if you qualify the condition prescribed under Section 16(1).

ITC is meant for usage and not for refund claim except two kinds of refund mentioned above.

[Shilpi Jain]

In my reply I have mentioned ELIGIBLE refund.

Every ITC balance is not an eligible refund. So as well put by Katuri sir, those are the instances of going for refund.

However, under the CENVAT regime there are certain decisions for and against claiming of refund of ITC balance on closure of business.

Each facts and circumstances will have to be seen independently to assess eligibility of refund.

[KASTURI SETHI]

With reference to serial no 8 above, I wholly concur with  the views of Madam Shilpi Jain. There are case laws in favour of the parties  wherein refund of Cenvat Credit was allowed due to closure of the factory by CESTAT/CEGAT.

In pre-GST era , Cenvat Credit was required to be used in the manufacture or in relation to the manufacture of finished products or in providing taxable output service. Now in GST regime in the business or furtherance of business.  The scope  stands enlarged.

[UDHAYKUMAR KANDASAMY]

Dear All,

Thanks for all of you for providing valuable insights in this matter.

AI Summary

GST Forum Clarifies Refunds Under Section 54(8)(e) of CGST Act; Highlights Input Tax Credit Conditions A discussion on the Goods and Services Tax (GST) forum addressed the types of refunds claimable under Section 54(8)(e) of the CGST Act 2017. Participants clarified that refunds could be claimed for balances in the Electronic Cash Ledger, illegal or unconstitutional levies, excess payments, and misunderstandings of GST laws. It was noted that refunds are not applicable for excess credit in the Electronic Credit Ledger unless specified conditions are met. The discussion emphasized the importance of understanding sections 54(3) and 16(1) of the CGST Act, which outline conditions for input tax credit usage and refund eligibility.