CA Mukund Abhyankar

Mukund Abhyankar

1) No urgent relief to Exporters

Recent GST Council meeting decisions under which, were announced in the press conference by the Finance Minister on 06.10.2017, promised great relief to exporters whereby it was declared with big Enthusiasm that the Government will start issuing refund cheques from 10.10.2017.

This well intended move from Political leadership, like many others in the past, seems to have lost its substance in the bureaucratic hurdles posed in its actual implementation. Decision taken by GST Council is thus in the danger of becoming a hollow promise without real benefit, unless flaws in implementation highlighted in this Article are rectified., 

The Customs Department has today issued an Instruction No. 15/2017-Customs 09th October, 2017, whereby they have issued a scheme for  giving immediate refunds to exporters without waiting for uploading of GST Returns.

The scheme announced thus however is narrowly designed to grant immediate Refunds only to those exporters who have   first paid IGST on exports and then have filed refund claim for that amount of IGST. As a result, majority of exporters who follow other option of making duty free exports and filing refund claims for proportionate ITC on inputs are simply left out for any immediate benefit.

Immediate refunds under the scheme for small number of exporters, who have availed option of payment of IGST on export are also not easily available and are subject to fulfillment of certain conditions.

The Conditions given are

a) Filing of GSTR-1 & GSTR-3 or 3B

It has been told in the instruction note that exporters need to mention the shipping bills numbers in the GSTR-1 return, which was not a mandatory field in the GSTN Return format and hence it is likely that many exporters might not have updated this field in the Return uploaded, so that they will be simply removed from the scheme of immediate refunds. Most of the exporters who have already filed their GSTR-1 returns, and those who have not mentioned shipping bill numbers (as it was not a compulsory field) and some dealers who were not aware about the importance of shipping bill numbers to be given in the GSTR-1 return for claiming refund on exports will now not get any immediate refunds. 

As everyone knows, GST returns cannot be revised, but correction can be done in the Returns of subsequent months.

Hence now all those exporters who have not mentioned shipping bill numbers in GSTR1, will have to wait till 10.11.2017 for any corrections (Under Column No.10A of GSTR-1) in the export tab for Aug 17 GSTR 1 Return, entire return filing process for which will get completed only after Jul-17 returns are filed, most probably in the month of Dec-17. 

2) Still No refund mechanism in place for Exporters making duty free exports under LUT/Bond having huge accumulation of ITC credits.

As mentioned above, scheme for immediate refunds as structured at present, does not  address the concerns of most of exporters (may be around  75% of total exporters) who have availed the option of making duty free exports and have got huge accumulation of ITC credits and therefore wish to file refund claims for proportionate  ITC.

The scheme suffers from a major drawback because it gives refunds to only those exporters who have availed the option of Export with payment of IGST.

Unless any Procedure or mechanism is kept in place immediately for issuing Refunds of Accumulated ITC for exporters who have opted for duty free exports,   many exporters will be left in the lurch, and will have to continue to suffer for more months.

3) Simplification of Export procedures for obtaining LUT/BOND for making duty free export:

The dealers are not getting LUT Bond within one or two days of filing application, and are being asked to provide various information and queries before issuing any LUT. As a result the dealer has to postpone making duty free exports or has to export by paying IGST, leading to cash flow issue.

The GST department should issue provisional LUT immediately within one day after filing of LUT application and all the remaining documents and information shall have to be complied with within a month so that the exports are not hampered.

4) Removal of procedure for furnishing LUT/Bond for Service Exporters

Under earlier tax regime, service exporters were not required to submit and LUT/Bond for making duty free exports. For claiming any benefit as exports, the service exporter had to submit export service invoice and copy of Foreign Inward remittance certificate (FIRC) which is currently also considered as a valid proof of export for services under GST regime.

In such a scenario, since service exporters are not involved in any export of goods, then such a provision asking for LUT/ Bond is not practical as exports will be considered as valid only when it is proved that the services are exported out of India and payment for such exports is received in Free convertible foreign exchange (FIRC). 

5) Issue of provisional refunds for Exports as per Turnover and ITC figures claimed while filing GSTR-3B Return:-

The Government should start the facility of issuing provisional refund atleast upto 80% of ITC accumulated or GST paid on exports as per he figures claimed by the dealer while filing GSTR-3B returns. This will be very much helpful to ease the Working capital blockage being currently faced by lost exporters as they have to pay GST on ITC on purchases from suppliers, but the same are not getting realized due to GSTN issues.

In case Provisional refund processing is not getting started, then it will lead to loss of jobs in the SME / MSME sector since the exporters may not be in a position to pay its suppliers who are very much dependent on funds received from supplies to exporters.

6) No information regarding how to debit the amount of refund claim to be filed for the period prior to 01.07.2017

Under GSTR-3B, there is no option to debit the figures in respect of refund claim to be filed for the period upto Jun-17, since GSTR-3B shows balance of credit availed only in respect of the month for which return is filed. However if any debit is to be made for the period prior to Jul-17, though opening balance is carried forwarded though TRAN-1, GSTR-3B shows negative figure in case debit for refund is more than the amount of credit availed in GSTR-3B, hence it does-not capture the said figures.

Option to debit refund claim amount should be available under Electronic Credit ledger for filing of refund claims, in the absence of which refund claim will be disallowed.

7) Where to debit amount of KKC refund claim, not claimed in TRAN-1, but balance available in ST-3 as on 30.06.2017

Currently there is no procedure to debit refund claim of KKC amount shown as  closing balance in ST-3 as on 30.06.2017, but not carried forwarded in TRAN-1, since the assesses have already filed ST-3 as on 15.08.2017 and also filed revised return on 29.08.2017.

The GST Council should issue clarification to allow the refund claim for KKC shown in ST-3 as on 30.06.2017, subject to availability of KKC balance as on 30.06.2017.

(Author thanks Mr. Priyaranjan Maurya for helping in writing of the article and  can be reached at

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  1. B.SEKAR says:

    sir, is it correct that non-residential citizen of india will have no right to be the authoise signatory., as a director of the company? If a retired or resigned director’s DSC cann’t be removed from the GST portal also, Non resident’s DSC cannot be uploaded in the GST portal.>>>>>>> Any way to do so?

  2. S C SUMAN says:

    Very Very informative and clearly worded article and thanks for the information Mr Mukund Abhayankar.
    I am facing a peculier problem for the last two months for filing of Form 3B and GSTR1 of a company. As soon as I log in my company, which is registered under GST in UP, and click on RETURN FILING DASHBOARD, IT DOES NOT OPEN AND PROCEED FURTHER. rESULT IS THAT i CAN NOT FILE EVEN A nil 3b OR GSTR 1. All my efforts to get help from GSTN authorities have failed . Even a visit to GST office in Delhi and Noida have not been of help.

    Shall be greatful for assistance in the matter. If required I can share details of the company, GSTN Number etc also.

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