1. CBEC vide circular No. 135/05/2020 dated 31.03.2020 remove the restriction on clubbing of tax periods across Financial Years. Such restriction was imposed vide CBI&C circular No. 37/11/2018-GST dated 15-3-2018

2. Need for clubbing of refund claim across financial years arises while claiming refund of  Input Tax Credit for exports, It is possible that input tax credit may be received in a month while exports may be made in subsequent month. In some months, there will be exports but no input tax credit available. In such cases, the refund claim can be filed during ‘relevant period’ which is different from ‘tax period’. Hence ,exporter may file refund claim per month or per quarter or by clubbing successive calendar months/quarters. However , CBI&C vide circular No. 37/11/2018-GST dated 15-3-2018 put restrictions on clubbing of tax period across different financial years .

2.1. As per Para 11.2 of the said circular – The exporter, at his option, may file refund claim for one calendar month / quarter or by clubbing successive calendar months / quarters. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.. This principle should apply for refund of tax due to inverted duty structure also.

3. The restriction of clubbing of tax period has been modified vide Para 8 of circular No. 125/44/2019 dated 18.11.2019 . Salient points of the said circular has been brought out in succeeding  Paragraphs

3.1. As per Para 8 of circular No. 125/44/2019 dated 18.11.2019 ,the applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years. [

3.2. Registered persons having aggregate turnover of up to Rs. 1.5 crore in the preceding financial year or the current financial year opting to file FORM GSTR-1 on quarterly basis, can only apply for refund on a quarterly basis or clubbing successive quarters as aforesaid

3.3. However, refund claims under categories listed at (a), (c) and (e) in para 3 above must be filed by the applicant chronologically.

3.4. Categories listed at Para 3 of circular No. 125/44/2019 dated 18.11.2019 are as indicated below :-

(a) Refund of unutilized input tax credit (ITC) on account of exports without payment of tax.

(b) Refund of tax paid on export of services with payment of tax;

(c) Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;

4. This means that an applicant, after submitting a refund application under any of these categories for a certain period, shall not be subsequently allowed to file a refund claim under the same category for any previous period. This principle / limitation, however, shall not apply in cases where a fresh application is being filed pursuant to a deficiency memo having been issued earlier.

5. Hon’ble Delhi High Court in Order dated 21.01.2020, in the case of M/s Pitambra Books Pvt Ltd., vide para 13 of the said order has stayed the rigour of paragraph 8 of Circular No. 125/44/2019-GST dated 18.11.2019 and has also directed the Government to either open the online portal so as to enable the petitioner to file the tax refund electronically, or to accept the same manually within 4 weeks from the Order.

5.1 Hon’ble Delhi High Court vide para 12 of the aforesaid Order has observed that the Circulars can supplant but not supplement the law. Circulars might mitigate rigours of law by granting administrative relief beyond relevant provisions of the statute, however, Central Government is not empowered to withdraw benefits or impose stricter conditions than postulated by the law.

6. Further, same issue has been raised in various other representations also, especially those received from the merchant exporters wherein merchant exporters have received the supplies of goods in the last quarter of a Financial Year and have made exports in the next Financial Year i.e. from April onwards. The restriction imposed vide Para 8 of the master refund circular prohibits the refund of ITC accrued in such cases as well.

7. Even on perusal of provisions under sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 and sub-section (3) of section 54 of the CGST Act, there appears no bar in claiming refund by clubbing different months across successive Financial Years.

8. The issue has been examined and it has been decided to remove the restriction on clubbing of tax periods across Financial Years. Accordingly, circular No. 125/44/2019-GST dated 18.11.2019 stands modified to that extent i.e. the restriction on bunching of refund claims across financial years shall not apply.

The Author can be approached at caanitabhadra@gmail.com.

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December 2020