CA Ajay Joshi

CBEC had vide Circular No. 17/17/2017 – GST, dated 15.11.2017 and Circular No. 24/24/2017 – GST, dated 21.12.2017, clarified various issues in relation to processing of claims for refund. Several representations were received by CBEC seeking further clarifications on issues relating to refund. In order to clarify such issues and with a view to ensure uniformity in the implementation of the provisions of the law across field formations, the CBEC has again issued clarification on a list of issues through Circular No. 37/11/2018-GST, dated 15.03.2018 . The matters covered in the clarifications are :

1. Non-availment of drawback – A supplier availing of drawback only with respect to basic customs duty shall be eligible for refund of unutilized ITC of CGST /SGST /UGST / IGST / compensation cess.

It is further clarified that refund of eligible credit on account of SGST shall be available even if the supplier of goods or services or both has availed of drawback in respect of central tax.

2. Amendment through Table 9 of GSTR-1 – Refund claims processing not to be withheld on account of mis-matches between data contained in FORM GSTR-1, FORM GSTR-3B and shipping bills/bills of export.

  • If a taxpayer has committed an error while entering the details of an invoice / shipping bill / bill of export in Table 6A or Table 6B of FORM GSTR-1, he can rectify the same in Table 9 of FORM GSTR-1.
  • While processing refund claims on account of zero rated supplies, information contained in Table 9 of FORM GSTR-1 of the subsequent tax periods should be taken into cognizance, wherever applicable.
  • In case of discrepancies between the data furnished by the taxpayer in FORM GSTR-3B and FORM GSTR-1, the officer shall refer to the said Circular and process the refund application accordingly.

3. Exports without LUT – The substantive benefits of zero rating may 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 may be allowed on ex post facto basis taking into account the facts and circumstances of each case.

4. Exports after specified period – Exports have been zero rated under the IGST Act, 2017 and as long as goods have actually been exported even after a period of three months, payment of IGST first and claiming refund at a subsequent date should not be insisted upon. In such cases, the jurisdictional Commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case. The same principle should be followed in case of export of services.

5. Deficiency memo – That once an applicant has been communicated the deficiencies in respect of a particular application, the applicant shall furnish a fresh refund application after rectification of such deficiencies ( rule 90 of the CGST Rules). Therefore, there can be only one deficiency memo for one refund application and once such a memo has been issued, the applicant is required to file a fresh refund application, manually in FORM GST RFD-01A.

6. Self-declaration for non-prosecution – Self–declaration for non-prosecution is not required with every refund claim (under LUT).

7. Refund of transitional credit The transitional credit pertains to duties and taxes paid under the existing laws viz., under Central Excise Act, 1944 and Chapter V of the Finance Act, 1994. The same cannot be said to have been availed during the relevant period and thus, cannot be treated as part of ‘Net ITC’ under Rule 89(4) and (5) of CGST Rules.

8. Discrepancy between values of GST invoice and shipping bill/bill of export – During the processing of the refund claim, the value of the goods declared in the GST invoice and the value in the corresponding shipping bill / bill of export should be examined and the lower of the two values should be sanctioned as refund.

9. Refund of taxes paid under existing laws

  • Refunds of tax/duty paid under the erstwhile law under Section 142 shall not be filed under GST in Form GST RFD-1A and all such applications shall be rejected.
  • The amount of refund arising out of claims of refund filed under the existing laws shall be refunded in cash (sub-section (3) of section 142 of the CGST Act).
  • Where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse and therefore, will not be transitioned into GST (first proviso to the sub-section (3) of section 142 of the CGST Act)
  • No refund of the amount of CENVAT credit is granted in case the said amount has been transitioned under GST.

10. Filing frequency of Refunds – 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.

11. BRC / FIRC for export of goods – Proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and need not be insisted upon.

12. Supplies to Merchant Exporters –

  • Person supplying the goods to a merchant exporter @0.05%/ 0.1% is eligible for refund on account of inverted tax structure.
  • The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure.
  • The exporter of such goods can export the goods only under LUT / bond and cannot export on payment of integrated tax.

13. Requirement of invoices for processing of claims for refund – Exhaustive list of documents required for processing the various categories of refund claims on exports is provided below:

14. Export of Services with payment of tax (Refund of IGST paid on export of services) –

  • Copy of FORM RFD-01A filed on common portal
  • Copy of Statement 2 of FORM RFD-01A
  • Invoices w.r.t. input, input services and capital goods
  • BRC/FIRC for export of services
  • Undertaking / Declaration in FORM RFD-01A

15. Export (goods or services) without payment of tax (Refund of accumulated ITC of IGST /CGST /SGST /UTGST /Cess)

  • Copy of FORM RFD-01A filed on common portal
  • Copy of Statement 3A of FORM RFD-01A generated on common portal
  • Copy of Statement 3 of FORM RFD-01A
  • Invoices w.r.t. input and input services
  • BRC/FIRC for export of services
  • Undertaking / Declaration in FORM RFD-01A

16. Refunds may not be withheld due to minor procedural lapses or non-substantive errors or omission.

17. Above instructions shall apply to exports made on or after 1.7.2017.

Author Bio

Qualification: CA in Job / Business
Company: Well known company of Aditya Birla Group
Location: Jodhpur, Rajasthan, IN
Member Since: 11 Jul 2017 | Total Posts: 22
Qualified CA with around 35 years of experience in - Financial Accounting, Core Finance, Taxation, VAT implementation, GST implementation, ERP (SAP) implementation, EPCG; Duty Draw Back, Insurance Management, Logistics Management, etc. Author of books on VAT, Central Excise, Customs & Direct Tax View Full Profile

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One Comment

  1. Abhishek Jaiin says:

    For Export of Engineering Consultancy Services Banks are not issuing BRC/FIRC stating that SOFTEX form is not submitted. Softex form is only for Software exporters.
    Client is into Engineering consultancy business and does not have STPI registration. bank is refusing to issue realisation certificate.

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