Refund of taxes, interest, others from government has always been a complicated procedure. Under Goods and Services Tax Act (GST Law), the government has tried to resolve this issue by converting the process online, thereby making the process transparent. The officers still have the right to call you to show cause why refund should not be rejected on account of ‘timelines, transactions, rate, input tax credit (ITC) etc.’ and the old sage continues.
Common questions that cross the mind when we handle refund assignment-
Under what circumstances can you file an application for refund? Single application form/multiple forms? What if we missed the timeline for reply to notice? Which documents are to be uploaded with application form? Where to check the status of refund application.
In this write up, we would learn the easy way to align the procedure of filing refund under GST Act.
Classification of refund application: –
Generally, refund is associated with exports but there are numerous cases for which a taxpayer may file refund. Let us understand the cases under which refund may be filed: –
1. Refund of unutilized ITC;
2. Zero-rate supply without payment of tax (this relates to export of goods/services); and
3. Inverted duty structure (where rate of tax on inward supply is higher than rate of tax on outward supply).
4. Refund of ITC on supplies made to SEZ unit/SEZ developer (without payment of tax);
5. Refund of excess balance in Electronic Cash ledger;
6. On account of refund of recipient of deemed export;
7. Refund of tax paid on export of goods or services (cases where exports is made with payment of tax);
8. Refund of tax paid on supplies made to SEZ unit/SEZ developer (with payment of tax);
9. Tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice-versa;
10. On account of Refund by Supplier of deemed export;
11. Refund of ITC of goods and services for persons notified under Section 55;
12. Any other (reason to be specified);
13. Excess payment of tax; and
14. On account of Assessment/Provisional Assessment/Appeal/Any other order.
Therefore, refund may be applied for any of the above listed cases via refund application on GST portal within two years of relevant date.
Collation of documents to be uploaded while filing refund application: –
Maximum of 10 attachments not exceeding 5MB each are to be uploaded along with details of refund calculation in the form and utility which is to be downloaded from the specific form for which refund is filed. Documents such as invoices, statement of ITC, undertakings etc. to be uploaded are as listed in Annexure- A and B of Circular No. 125/44/2019-GST dated 18th November 2019.
Below is the sequential list of Forms relating to refund where to file, orders, replies etc
Form GST RFD-01 Application for refund
Form GST RFD-01W Withdrawal of refund application
Form GST RFD-02 (Acknowledgement) In case of electronic cash ledger automatic reply for acknowledgement of application shall be uploaded and in all other case proper officer (“PO”) shall issue acknowledgement within 15 days of application. (The PO checks whether all documents required for refund have been uploaded and application is proper)
Form GST RFD-03 (Deficiency Memo) PO shall issue deficiency memo where the application is not complete as per law and request applicant to file fresh application. (Where some document is missing, wrong period, time barred etc. the PO shall issue deficiency memo)
Form GST RFD-04 Provisional Refund
Form GST RFD-05 (Interest on delayed refund) Where interest is payable on delay in disbursement of refund. The Order shall be passed mentioning amount of refund, period of delay and amount of interest to be credited in the bank account mentioned in the registration.
Form GST RFD-06 (Disbursal of refund) Order for disbursal of refund sanctioned under Section 54 (5), after adjusting provisional refund under Section 54 (6) and any outstanding demand. Also, where partial refund is rejected the same shall be recredited to electronic credit ledger via issuance of Form GST PMT-03.
Form GST RFD-07 (Part-A) (Refund Withheld) Order passed by PO against the applicant, due to Section 54 (10) and (11)- Where the registered person has defaulted in filing of return, or the refund is subject to appeal respectively.
Form GST RFD-07 (Part-B) (Refund Realised) Where applicant becomes entitled to refund withheld under Section 54 (10) and (11), the Order shall be passed in Part-B.
Note: Refund of exports of goods is filed via GSTR-3B and in case of export of services is filed via Form GST RFD-01 in accordance with rule 89.
Form GST PMT-03 (Recredit to ECL) If due to deficiency in the refund application, refund is not disbursed the amount of ITC shall be recredited to the electronic credit ledger (“ECL”).
Form GST RFD-08 (Show Cause Notice (“SCN”)) PO shall issue SCN to applicant to reply to why refund should be disbursed.
Form GST RFD-09 (Reply to SCN) Applicant shall reply against the SCN issued in Form GST RFD-08 withing 15 days
Form GST RFD-10 (Application Form for notified persons) Persons notified by government as per Section 55 may file for refund quarterly along with statement of inward supply in Form GSTR-11 with acknowledgement to be received in Form GST RFD-2. The refund would be realised where inward supplies are received from registered persons against tax invoice with name and GSTIN mentioned on the tax invoice along with rule 92. Where provision is inconsistent with treaty, treaty shall prevail.
Form GST RFD-10B (Application Form for airport retail shops) Refund of taxes to retail outlets for making tax free supply to outgoing international tourist in exchange of foreign currency against tax invoice mentioning GSTIN with compliance of rule 92 shall be filed quarterly.
Form GST RFD-11 Letter of Undertaking LUT to be filed where a registered person makes outward supply without payment of tax. Undertaking to pay interest where,
1. After expiry of 15 days, if the goods are not exported within three months of issuance of invoice: and
2. After expiry of 15 days, if convertible foreign exchange (or INR, where permitted) has not been realised within one year of export of services.
Further, the person would not be able to avail the benefit on export without payment of tax. Until the above conditions are complied.
The Table 6A of GSTR-1 shall be automatically updated from the Customs information, where GSTR-1 is delayed the same shall be updated after filing GSTR-3B.
Where the amount is disbursed in same year it shall not be required to be revalidated and where the PO is satisfied that amount is not payable the order under Form GST RFD-06 shall be passed to transfer the amount to consumer welfare fund in Form GST RFD-05.
Conclusion
The above briefly summarizes the filing of refund on the GST portal. Although, the above procedure might seem uncomplicated but there are numerous practical challenges faced by taxpayers. We shall discuss the challenges/issues and the probable resolution in the follow up article.
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