computation of refund in case of time-barred export invoices/FIRCs under Rule 89(4) of CGST Rules

[Angre Port]

There is a case of refund of accumulated ITC on account of export of services without payment of tax under Section 54 of the CGST Act read with Rule 89(4) of the CGST Rules. During scrutiny of the refund application, it is noticed that certain export invoices/FIRCs are time-barred, being beyond the limitation period prescribed under Section 54.

The issue arises in a situation where the taxpayer has only export turnover and no domestic turnover during the relevant period.

As per Rule 89(4), refund is calculated on the basis of "Turnover of zero-rated supply" in the numerator and "Adjusted Total Turnover" in the denominator. However, the Rule does not specifically clarify the treatment of time-barred export invoices/FIRCs while computing the refund amount.

If eligible turnover of zero-rated supply is taken (eligible word is not mentioned in rule 89 of CGST Rules, in the numerator after excluding time-barred invoices/FIRCs, then what should be considered as "Adjusted Total Turnover" in the denominator? In cases where there is no domestic turnover, exclusion of such time-barred turnover from both numerator and denominator may result in both figures becoming identical, thereby leaving the refund amount unchanged. Consequently, the taxpayer may still become eligible for the entire refund amount despite certain invoices/FIRCs being time-barred.

Sir Please guide in this issue and share any judgement, circular, or clarification in respect of this issue.

AI Summary

Refund computation for zero-rated exports examines whether time-barred invoices and FIRCs must be excluded from the statutory formula.
Computation of refund of accumulated input tax credit on zero-rated export of services under Section 54 of the CGST Act read with Rule 89(4) of the CGST Rules, where certain export invoices or foreign inward remittance certificates are stated to be time-barred under the limitation period. The discussion focuses on whether such time-barred export turnover can be treated as part of the refund formula when the taxpayer has only export turnover and no domestic turnover during the relevant period, and whether exclusion of that turnover from the numerator necessarily affects the denominator under the prescribed formula.