GST - Re-credit of Rejected Refund Amount in ECL - Export of Services with Payment of IGST

[Mohideen A]

Dear Experts, We seek your guidance on the following issue relating to re-credit of the rejected portion of a GST refund claim.

Facts of the Case:

1. The taxpayer filed a GST refund application under the category "Export of Services with Payment of Tax", wherein IGST was paid on the export transactions.
2. The refund application was partly sanctioned and partly rejected by the GST department.
3. Consequently, the ITC attributable to the rejected portion of the refund needs to be re-credited to the taxpayer's Electronic Credit Ledger (ECL).
4. However, since the refund application was filed under the category of export with payment of IGST, the PMT-03 re-credit option is not available on the GST portal.

Query:

1. In such cases, what is the prescribed procedure for obtaining re-credit of the rejected refund amount in the Electronic Credit Ledger?
2. Can the taxpayer submit a manual representation to the jurisdictional officer requesting re-credit of the rejected amount through a manual PMT-03 order or any other mechanism?
3. Is filing an undertaking under Rule 93 of the CGST Rules, 2017, not to appeal against the rejected portion of the refund, sufficient to claim such re-credit?
4. Are there any relevant CBIC circulars, GST portal advisories, or judicial precedents specifically addressing re-credit of rejected refund amounts in cases of export with payment of IGST, where the PMT-03 option is unavailable?

We would appreciate guidance on the applicable legal provisions and the practical procedure to be followed in such cases.

[Ashley Smith]

Dear Mohideen A,

My view, as a general opinion (the answer depends on the rejection order and on how the IGST was paid):

1. Why PMT-03 is not offered
Rule 93(2) re-credits "the amount debited, to the extent of rejection" by an order in FORM GST PMT-03. That debit is the one made in the electronic credit ledger when a refund of unutilised ITC is applied for (rule 89(3)). In an export of services with payment of IGST, the claim is for refund of IGST already paid, so no ledger debit is made at filing. That is probably why the portal gives no PMT-03 option. On this reading, rule 93(2) is arguably not attracted. This is my reading and it can be contested.

2. Manual representation
You may make one, but I could not find a prescribed manual PMT-03 mechanism for this category. The officer may decline on the ground that rule 93 does not apply. Please ask for a reasoned reply in writing.

3. Undertaking under Rule 93
The explanation to rule 93 deems a refund rejected if the claimant undertakes in writing not to appeal. It is a condition for re-credit, not a right by itself, and the officer must still pass the PMT-03 order. Once given, the appeal route is lost, so decide on appeal first.

4. Other routes
(a) Appeal under section 107 (APL-01) within the time limit, if you dispute the rejection.
(b) If part of it is tax paid in excess or wrongly paid from the credit ledger, see rule 86(4A) (re-credit by PMT-03 if admissible).
(c) Writ: in Garden Silk Mills Ltd v. Union of India (2019-TIOL-859-HC-AHM-GST), the Gujarat High Court allowed manual re-credit in GSTR-3B where the portal had no facility. That case concerned accumulated ITC debited at filing, so it may not apply directly, but it supports the argument that a missing portal facility should not defeat the credit.

References: Rules 93, 86(4), 86(4A); Circular 59/33/2018-GST (re-credit via RFD-01B after undertaking, for ITC refund claims). I am not aware of a circular specific to IGST-paid exports. Experts may correct me.

Please read the rejection order closely, as the ground decides the best route.

AI Summary

Refund re-credit for IGST-paid service exports remains uncertain when claims are partly rejected and the portal re-credit option is unavailable.
Re-credit of input tax credit attributed to the rejected portion of a GST refund is in question where services are exported with payment of IGST. The refund application was partly sanctioned and partly rejected, but the GST portal does not offer the PMT-03 re-credit option for the export-with-payment category. The taxpayer seeks restoration of the credit attributed to the rejected portion in the Electronic Credit Ledger (ECL). Questions arise whether the taxpayer may submit a manual representation to the jurisdictional officer seeking re-credit through a manual PMT-03 order or another mechanism, and whether an undertaking under Rule 93 of the CGST Rules, 2017, not to appeal the rejected portion, is sufficient.