TaxTMI 
TaxTMI 
Refunds
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....nd on account of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued (tax paid on advance payment) 14. Refund of CGST & SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa. 15. Refudn to CSD Canteens. The list is only indicative and not exhaustive. Q 2. Whether Provisional Refund is allowable for all refunds under GST? Ans. No. Section 54(6) of CGST Act provides for grant of provisional refund of 90% of the total refund claim, in case the claim relates to refund arising on account of zero rated supplies. Thus only refund claims where refund arises on account of zero rated supply will be entitled to provisional refund. Q 3. Which supplies would be considered as zero rated? Ans. In terms of Section 16(1) of IGST Act, following supplies are considered as zero rated (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. Q 4. The GST Law allows exports to be made under a LUT in all cases. Is this statement true or false? Ans. The facility of exp....
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....a fresh refund application, manually in FORM GST RFD-01A. Once an application has been submitted afresh, pursuant to a deficiency memo, the proper officer will not serve another deficiency memo with respect to the application for the same period, unless the deficiencies pointed out in the original memo remain unrectified, either wholly or partly, or any other substantive deficiency is noticed subsequently (Para 6.1 of CBIC Circular no. 37/11/2018-GST dated 15.03.2018) Q 9. How can fresh claims be filed pursuant to issuance of deficiency memo? Ans. This fresh application has to be accompanied with the original ARN, debit entry number generated originally and a hard copy of the refund application filed online earlier. Q 10. What would happen if exports have been made without submitting any Bond/LUT. Will refund be denied on account of such exports? Ans. No. Substantive benefits of zero rating will not be denied where it has been established that exports in terms of the relevant provisions have been made. The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT will be allowed on ex post facto basis taking into account the facts and circum....
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....supplies? Ans. No. The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure as per the provisions of clause (ii) of the first proviso to subsection (3) of section 54 of the CGST Act. Q 16. What is meant by the terms "relevant period" in so far as refund claims under GST are concerned. Is it different from "tax period" defined under the law? Ans. Section 2(107) of the CGST Act defines the term "tax period" as the period for which the return is required to be furnished. The terms 'Net ITC' and 'turnover of zero rated supply of goods/services' are used in the context of the relevant period in rule 89(4) of CGST Rules. The phrase 'relevant period' has been defined in the said sub-rule as 'the period for which the claim has been filed'. Thus, it can be seen that the two terms have different connotations under the law. Q 17. Is refund linked to a tax period or relevant period under GST Law? Ans. Refund is related to "relevant period" and not to "tax period". In many scenarios, exports may not have been made in that period in which the inputs or input services were received and input tax credit has been availed. Similar....
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....Reserve Bank of India. (The underlined portion has been inserted vide CGST (Amendment) Act, 2018 and shall not into force once the same is notified). Q 23. What are the circumstances in which manual filing of refund claims is permitted under GST? Ans. Manual filing of refund claims is permitted, vide circular no.17/17/2017-GST dated 15th November 2017 and circular no.24/24/2017 dated 24th November 2017 and circular no.36/10/2018-GST dated 13th March 2018, if the claim is on account of following (i) refund of unutilized input tax credit on account of zero rated supplies (ii) refund of unutilized input tax credit 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) of goods or services or both except those supplies which are notified by the Government on the recommendations of the Council. (iii) Refund on account of supplies in terms of notification Nos. 40/2017-Central Tax (Rate) and 41/2017-Integrated Tax (Rate) both dated 23.10.2017 (iv) refund of tax on the supply of goods regarded as deemed exports; (v) refund of balance in the electronic cash ledger; and ....
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....been complied with in respect of the amount refunded. Q 28. What is the format in which the undertaking referred to above needs to be filed? Ans. The undertaking should be submitted manually along with the refund claim and the same is available in FORM RFD-01A on the common portal. Q 29. What will happen if the refund claim of unutilised ITC is rejected? Ans. Where any amount claimed as refund is rejected under rule 92 of the CGST Rules, either fully or partly, the amount debited, to the extent of rejection, shall be recredited to the electronic credit ledger by an order made in FORM GST RFD-1B until the FORM GST PMT-03 is available on the common portal. (Para 4 of circular no. 59/33/2018-GST dated 04th September, 2018 refers). Q 30. In respect of deemed export supplies, who can claim refund? Ans. The third proviso to rule 89(1) of the CGST Rules allows the recipient or the supplier to apply for refund of tax paid on such deemed export supplies. Q 31. What are the documents required to be filed where the claim is on account of deemed exports? Ans. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in notification ....
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....Government exercised its powers to curtail refund of ITC in respect of any product/services ? Ans. Yes. The government has issued notification no.15/2017-Central Tax (Rate) dated 28th June 2017 wherein it has been notified that no refund of unutilised input tax credit shall be allowed under section 54(3) of the CGST Act, in case of supply of services specified in sub-item (b) of item 5 of Schedule II of the Central Goods and Services Tax Act. The supplies specified under item 5(b) of Schedule II are construction services. In respect of goods, the central government has issued notification no.5/2017- Central Tax (Rate) dated 28th June 2017 as amended by notification no.44/2017-Central Tax (Rate) dated 14.11.2017 and notification no.20/2018-Central Tax (Rate) dated 26th July 2018. The government has notified the following goods in respect of which unutilized ITC will not be admissible as refund. Sr.No Tariff item, heading, sub-heading or Chapter Description of Goods 1 8601 Rail locomotives powered from an external source of electricity or by electric accumulators 2 8602 Other rail locomotives; locomotive tenders; such as Diesel-electric locomotives, Steam locomotives and t....
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....s "Net ITC" mean for the purpose of calculation of refund amount? Ans. "Net ITC" for the purpose of refund on account of zero rated supply means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both of Rule 89 of CGST Rules. "Net ITC" for the purpose of refund on account of inverted rate structure means input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both of Rule 89 of CGST Rules. Q 40. What does Turnover of zero rated supply of goods mean for the purpose of calculation of refund amount? Ans. "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both of Rule 89 of CGST Rules. Q 41. What does Turnover of zero rated supply of services mean for the purpose of calculation of refund amount? Ans. "Turnover o....
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....TR-1/Table 6A and have correct shipping bill number, shipping bill date and port code; 3. The admitted tax liability of IGST under table 3.1(b) of GSTR-3B, is equal to, or greater than, the IGST amount claimed to have been paid under Table 6A of GSTR-1 of the corresponding period. Q 47. Can refund of IGST on export of goods be withheld under any circumstances? Ans. Yes. Situations where refund of IGST on goods can be withheld are as under (a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund in accordance with the provisions of sub-section (10) or sub-section (11) of section 54; or (b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962. Q 48. What are the modalities to be followed when refund is withheld on the request of the jurisdictional Commissioner of Central /State Tax? Ans. Where refund is withheld in accordance with request from jurisdictional commissionerate, the proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdic....
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....l, interest at the rate specified under section 56 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount. Thus, in cases of refund of pre-deposit amount, interest will have to be paid from the date of payment till the date of refund of the amount (and not from date of receipt of claim for such refund of pre-deposit) Q 50. What is the rate of interest notified by the Government for delayed settlement of refund claims? Ans. As per notification no.13/2017-Central Tax dated 28th June 2017, interest @6% will be payable under Section 56. (normal claims where payment is delayed beyond 60 days from the receipt of application). The same rate of interest @6% will be payable in cases of refund of pre-deposit. Interest @ 9% will be payable in cases of refund falling under proviso to Section 56. (cases where refund claim arises as a consequence of court order/judgement). Q 51. How will an order for payment of interest be made under GST? Ans. Rule 94 of the CGST Rules provide that an order for interest shall be made along with payment advice in Form GST RFD-05, specifying therein the amount of refund which is delayed, the per....
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....- (i) receipt of payment in convertible foreign exchange, where the supply of service had been completed prior to the receipt of such payment; or (ii) issue of invoice, where payment for the service had been received in advance prior to the date of issue of the invoice; (d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any Court, the date of communication of such judgment, decree, order or direction; (e) in the case of refund of unutilized input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises; (f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof; (g) in the case of a person, other than the supplier, the date of receipt of goods or services by such person; and (h) in any other case, the date of payment of tax. It is to be noted that for refund claim filed by UN bodies, Embassies etc the relevant date and the time period within which refund claim is to be filed is specified in Section 54(2) itself, which is before t....
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....s done at Invoice level and any mismatch of the laid down parameters returns shows error code. Q 58. How will acknowledgment of manual refund claims be given? Ans. The refund claim will be verified for its completeness and availability of supporting documents. Once completeness in all respects is ascertained, acknowledgement in Form GST RFD-02 shall be issued within 15 days from the date of filing of application and entry shall be made in the refund register for receipt of refund applications. The date of submission of application for which acknowledgement has been given will be considered as the date for ensuring whether the refund application has been sanctioned within the stipulated time period. Q 59. What are the conditions subject to which provisional refund will be granted? Ans. Rule 91 of the CGST Rules deal with the grant of provisional refund. The provisional refund in accordance with the provisions of section 54(6) shall be granted subject to the condition that the person claiming refund has, during any period of five years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act or under an existing....
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....services on payment of IGST, also needs to be verified from Form GSTR 3 or Form GSTR 3B as the case may be, filed by the applicant and it needs to be verified that the refund amount claimed shall be less than the tax paid on account of zero rated supplies as per Form GSTR-3 or 3B as the case may be. In case of export under bond / LUT, debit to the electronic credit ledger need to be checked up. If the sanctionable amount is less than the applied amount or if the refund claim is proposed to be rejected, then a notice has to be issued to the applicant in Form GST RFD-08. The applicant has to reply within 15 days of receipt of notice in Form GST 09. Principles of natural justice will have to be followed before making the final decision. Final order will be made by the proper officer in Form GST RFD-06. Q 64. How will final refund sanction order be issued? Ans. The proper officer shall issue the refund order manually for each head i.e. Central Tax / State Tax / UT Tax / Integrated Tax/Cess. Amount paid provisionally needs to be adjusted accordingly. Payment advice is to be made in FORM GST RFD-05. Refund, if any, will be paid by an order with payment advice in FORM GST RFD-05. The d....
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....RN). Accordingly, the jurisdictional proper officer of Central or State Tax, as the case may be, shall issue FORM GST RFD-05 and send it to the DDO for onward transmission for release of payment. After release of payment by the respective PAO to the applicant's bank account, the nodal officer of Central tax and State tax authority shall inform each other. The manner of communication as referred earlier shall be followed at the time of final sanctioning of the refund also. Q 67. Who can file claim refund on account of supply to SEZs? Ans. The DTA supplier will have to file the refund claim in such cases. Q 68. When can the DTA supplier file refund claims on account of supplies made to SEZ units? Ans. The proviso to Rule 89 stipulates that in respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer, the application for refund shall be filed by the - (a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone; (b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the speci....
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....lculated? Ans. The claim (of accumulated ITC) will be calculated using the following formula Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC /Adjusted Total Turnover Q 72. What are the documents to be filed along with the claim of refund on account of deemed exports, if the claim is to be filed by the supplier? Ans. In case such refund is sought by the supplier of deemed export supplies, the documentary evidences as specified in notification no.49/2017-Central Tax dated 18.10.2017 are required to be furnished. The notification specifies the following documents. 1. Acknowledgment by the jurisdictional Tax officer of the Advance Authorisation holder or Export Promotion Capital Goods Authorisation holder, as the case may be, that the said deemed export supplies have been received by the said Advance Authorisation or Export Promotion Capital Goods Authorisation holder, or a copy of the tax invoice under which such supplies have been made by the supplier, duly signed by the recipient Export Oriented Unit that said deemed export supplies have been received by it. 2. An undertaking by the recipient of deemed export....
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....ication No. 47/2017- Central Tax dated 18.10.2017 allows either the recipient or supplier of such supplies to claim refund of tax paid thereon. For supplies to EOU / EHTP / STP / BTP units in terms of notification No. 48/2017-Central Tax dated the 18th October, 2017, the following procedure and safeguards are prescribed - (i) The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in a prescribed proforma in "Form-A" (appended herewith) bearing a running serial number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made. The said intimation shall be given to - (a) the registered supplier; (b) the jurisdictional GST officer in charge of such registered supplier; and (c) its jurisdictional GST officers. (ii) The registered supplier thereafter will supply goods under tax invoice to the recipient EOU / EHTP / STP / BTP unit. (iii) On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to - (a) the registered supplier; (b) the jurisdictional GST officer in charge of such re....
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....l indicate the Goods and Services Tax Identification Number of the registered supplier and the tax invoice number issued by the registered supplier in respect of the said goods in the shipping bill or bill of export, as the case may be; (iv) the registered recipient shall be registered with an Export Promotion Council or a Commodity Board recognised by the Department of Commerce; (v) the registered recipient shall place an order on registered supplier for procuring goods at concessional rate and a copy of the same shall also be provided to the jurisdictional tax officer of the registered supplier; (vi) the registered recipient shall move the said goods from place of registered supplier - (a) directly to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported; or (b) directly to a registered warehouse from where the said goods shall be moved to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported; (vii) if the registered recipient intends to aggregate supplies from multiple registered suppliers and then export, the goods from each registered supplier shall move ....
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.... refund of ITC in respect of supplies on which the supplier has availed benefit of notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017 (at concessional rate of 0.1%). This entire 0.1% paid (along with ITC of other supplies on which concessional rate of GST has not been availed but used in export of such goods) will be available as refund. For other exports made by merchant exporters in respect of which concessional rate of GST has not been availed, the merchant exporters will be entitled to refund of accumulated ITC in terms of Rule 89(4) by resort to the following formula Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC /Adjusted Total Turnover It is important to note that for the purpose of above calculation, turnover of zero rated supply of goods WILL EXCLUDE turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both. Similarly, Net ITC will also EXCLUDE input tax credit availed for which refund is claimed under sub-rules (4A) (supplies under deemed export provisions) or (4B) (supplies to merchant exporters at concessional rate of duty) or both. Q 81. How ....
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....is not subject to the levy of compensation cess, it has been clarified vide circular no. 45/19/2018-GST dated 30th May 2018, that refund of accumulated ITC can be claimed in such situations, however the rebate route i.e. payment of IGST and claiming refund of compensation cess of IGST paid will not be permissible in in such cases. In such cases they cannot utilise the compensation cess paid on inputs for payment of IGST in view of the proviso to section 11(2) of the Cess Act, which allows the utilization of the input tax credit of cess, only for the payment of cess on the outward supplies. Accordingly, they cannot claim refund of compensation cess in case of zero-rated supply on payment of integrated tax. Q 85. How can refunds of excess balance in the electronic cash ledger be claimed? Ans. Excess balance in the cash ledger after making good all liabilities, would be available as refund to the registered person. Presently this refund is also available through RFD-01A procedure. Section 49(6) enables grants of refund of excess balance in the cash ledger and reads as under Q 86. Is there any time limit within which refund of excess balance in cash ledger need to be submitted? Ans....
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....refunds arising as a consequence of finalisation of provisional assessment? Ans. Such claims need to be filed within 2 years from the date of adjustment of tax after the final assessment thereof. Q 91. What documents need to be submitted along with the claim of refund (for refunds arising as consequence to finalization of provisional assessment)? Ans. The Refund claim needs to be filed in GST RFD-01A on the common portal accompanied by the following documents (a) the reference number of the final assessment order and a copy of the said order in a case where the refund arises on account of the finalisation of provisional assessment; (b) a declaration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees:; (c) a Certificate in Annexure 2 of FORM GST RFD-01A issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees: Q 92. Is manual ....
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....ration to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed does not exceed two lakh rupees:; (c) a Certificate in Annexure 2 of FORM GST RFD-01 issued by a chartered accountant or a cost accountant to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person, in a case where the amount of refund claimed exceeds two lakh rupees: Q 95. What is unjust enrichment. Does the concept apply in GST? Ans. The Hon'ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. v/s Commissioner of Central Excise & Customs as reported in 2005 (181) ELT 328 S.C. = 2005 (3) TMI 116 - SUPREME COURT OF INDIA has defined 'unjust enrichment' as under: (a) 'Unjust enrichment' means retention of a benefit by a person that is unjust or inequitable. 'Unjust enrichment' occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else. (b) That no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctr....