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Section 16 of the IGST Law defines “zero rated” supply which means export of goods or services or both and it includes supply of goods and services to Special Economic Zone (SEZ). Regarding zero rated supply the procedures are prescribed and according to which the goods can be exported either without payment of IGST and the unutilized Input Tax Credit (ITC) can be refunded. Another way is that the exporter may supply goods or services or both on payment of integrated tax and claim refund in accordance with the provisions of Section 54 of the CGST Act, 2017 and the rules made their under.
Regarding the first option, the exporter claiming the refund of unutilized Input Tax Credit will filed an application through the common portal and the same shall be accompanied by the documents prescribed i.e. copy of invoice, shipping bill, BRC etc.
Regarding the second option the copy of the shipping bills shall be deemed to be an application for the refund of the IGST and the applicant will have to furnish a valid return in FORM GSTR-3 from the common portal.
In the new regime new format of shipping bill is required to be filled considering the IGST Law. However ARE-1 procedure which was followed in earlier tax regime is dispensed with.
As per rule 96A of the CGST Rules, 2017 any registered person exporting goods or services or both without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT) in FORM GST RFD-11.
As regards LUT, it is clarified that it shall be valid for twelve months. If the exporter fails to comply with the conditions of the LUT he may be asked to furnish a bond. Exports may be allowed under existing LUTs/Bonds till 31st July 2017. Exporters shall submit the LUTs/bond in the revised format latest by 31st July, 2017.
The following registered person shall be eligible for submission of Letter of Undertaking in place of a bond:-
(a) A status holder as specified in paragraph 5 of the Foreign Trade Policy 2015- 2020; or
(b) who has received the due foreign inward remittances amounting to a minimum of 10% of the export turnover, which should not be less than one crore rupees, in the preceding financial year, and he has not been prosecuted for any offence under the Central Goods and Services Tax Act, 2017 (12 of 2017) or under any of the existing laws in case where the amount of tax evaded exceeds two hundred and fifty lakh rupees.
The Letter of Undertaking shall be furnished in duplicate for a financial year in the annexure to FORM GST RFD – 11 referred to in sub-rule (1) of rule 96A of the Central Goods and Services Tax Rules, 2017 and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorized by such working partner or Board of Directors of such company or proprietor on the letter head of the registered person.
The following registered person shall be eligible for submission of a bond:
FORM RFD -11 under rule 96A of the CGST Rules requires furnishing a bank guarantee with bond. Field formations have requested for clarity on the amount of bank guarantee as a security for the bond. In this regard it is directed that the jurisdictional Commissioner may decide about the amount of bank guarantee depending upon the track record of the exporter. If Commissioner is satisfied with the track record of an exporter then furnishing of bond without bank guarantee would suffice. In any case the bank guarantee should normally not exceed 15% of the bond amount.
It is further stated that the Bond/LUT shall be accepted by the jurisdictional Deputy/Assistant Commissioner having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the bond/LUT before Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, if in a State, the Commissioner of State Tax so directs, by general instruction, to exporter, the Bond/LUT in all cases be accepted by Central tax officer till such time the said administrative mechanism is implemented. Central Tax officers are directed to take every step to facilitate the exporters.
In the new regime let us comprehend the law in the best interest of the trade and welcome the GST Law with all gusto.