GST Refund to unregistered person

GST REFUND TO UNREGISTERED PERSON

Section: – 54(1)

Rule: – 89A

Form: – RFD-01

Notification No: – 26/2022-Central Tax dated 26.12.2022

Circular No: – S.No. 783 [F. No. 188/20/2022-GST] Dated 27th December, 2022

Recently in the 48th meeting of GST Council it has been proposed the procedure for refund to unregistered person. CBIC has issued circular stating detailed procedure for application of refund to unregistered person.

To understand the circular, I have tried to put up in simple language in the form of conversation with my colleague.

Kartick:- Hi Jai, Kya hal chal, kaisa chal raha hai.

Jai: – Hi Kartick, all good dost, tu bata, kaise yad kia aaj.

Kartick: – Kuch nai yar just abhi GST Council meeting khatm hua, uska press release dekh raha tha. Usme ek interesting recommendation dekha, ab jo unregistered taxpayer unko bhi refund miliega.

Jai: – Ha..main bhi padha.

Kartick: – Tuje kuch idea hai kya uske bare mai.

Jai: – Nai Bhai. Muje ek bar dekhna padega.

Kartick: – thik hai tu dekh le, kab call karu tuje.

Jai: – Ek bar kuch clarification aane de CBIC ke taraf se, uske bad hum discuss karte hai.

Kartick: – Done. To mai circular aane ke bad call karta hu tuje.

Jai: – okey bhai.

After releasing of Circular by CBIC

Kartick: – Hello, oye circular aa gya aur mera call bhi. Ab to bata de.

Jai: – are kya ho gya hai tuje, itna kya ghai padi. Koi client mila hai kya refund ke lie

Kartick: – Client to nai mila hai, but ek bar samjh ke leta hu, in case future mai kuch kaam aaya to.

Wo sab chod, ye bata tune padha ki nai.

Jai: – Padha bhai padha. Mai to Bimal Jain sir ke video ka wait kar raha tha, for more clarity.

Kartick: – Padha hai na tune, to thik hai na, jitna samjha, utna bata de.

Jai: – Thik hai dost.

Kartick: – Chal Shree Ganesh kar ab.

Jai: – Okey. Phale background samjhte hai.

Suppose tune ek flat book kia jiska price tha 45 lakh, aur payment schedule kuch iss tarah tha.

Date of Payment	Total payment	Net value	GST Amt	Remark
28-10-2021	1,00,000.00	95,238.10	4,761.90	Token Money
03-01-2022	4,50,000.00	4,28,571.43	21,429.00	First Demand Letter
15-02-2022	5,40,000.00	5,14,285.71	25,714.00	Second Demand Letter
28-03-2022	6,75,000.00	6,42,857.14	32,143.00	Third Demand Letter
Total	17,65,000.00	16,80,952.38	84,047.90

Suppose 12-12-2022 ko kisi reason se builder ke sath tera wo deal cancel ho gya. Tune builder se bola ki jo payment maine dia hai aapko wo muje aap return kar do. Builder agree ho gya, aur usne tuje refund de dia of Rs.16,80,952/-.

Kartick: – But maine to Builder ko 17,65,000/- ka payment dia tha, wo muje keval 16,80,952/-refund kar raha. Baki ka Rs.84,048/- ka kya?

Jai:- Wo Jo tune 84,048/- dia tha wo to builder ne deposit kar dia government ko.

Kartick: – Okey. Means builder abhi sale reverse kar dega wo flat ka but GST reverse nai kar payega due to restriction of section 34 issuing of credit note. [as per section 34 credit note of previous year can be issue upto 30th November of next year or filing of annual return, whichever is earlier]

[The section reproduced below: –

Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than 3[the thirtieth day of November] following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed]

Jai: – Sahi Pakde hai.

Kartick: – Okey, matlab Rs.84,048/- GST ka muje government ke pas se claim karna padega.

Jai: – Correct!

Kartick: – Ye to samjh aa gya, but jaha tak muje pata hai GST refund claim karne ke liye mere pas GST number hona chaiye na. ab ye refund ke lie mai GST number lu, ye to kuch jach nai raha.

Jai: – Isliye mere dost circular notify kia ha CBIC ne.
Kartick: – Accha, to usme detailed procedure dia hai?

Jai: – Yes Boss. Usme detailed mai dia hai, kaise, kya, refund ka application karna hai unregistered taxpayer ko.

Kartick: – To batane ke lie muharat nikalega, bata bhai kya karna padega.

Jai: – Okey, batata hu.

Step 1: –

• Obtain Temporary GST Registration on the basis of PAN.
• While applying for GST Registration Select same state/UT where your supplier is registered. For e.g. in above example if your builder is registered in Gujrat and the buyer is of Maharashtra, so while taking the registration buyer have to select Gujrat state.
• Perform Aadhar authentication process.
• Enter the Bank details in which buyer want to refund.

Step 2: – Make Application for Refund

• Make an application in form RFD-01 on the GSTN Portal under the category “REFUND FOR UNREGISTRED PERSON”.
• Fill the Statement 8

Sl. No	GSTIN of supplier	Document/ Invoice Details				Tax Paid				Details of payment of invoice value to the supplier		Details of payment received  against cance llation/ termi nation		Refund Amount Claimed (I+ C+ S+
		Type of doc-ument	No	Date	Tax-able Value	Integr ated Tax (I)	Cen-tral Tax (C)	State/ UT Tax (S)	Cess	Date	Amo-unt	Date	Amo-unt	Cess)
1	2	3	4	5	6	7	8	9	10	11	12	13	14	15

For Filing Statement 8 is required following details: –

1. Supplier GSTN

2. Copy invoice raised by supplier

3. Details of payment made to supplier

4. Details of payment received from supplier

> Documents need to attached in application: –

1. Copy of invoice issued by Supplier

2. Bank Statement or receipt issued by supplier as proof of making payment to supplier

3. Copy of agreement or contract

4. Letter issue by Supplier for cancellation of agreement or contract

5. Details of payment received from supplier on cancellation of agreement or contract. E.g. Bank Statement highlighting the payment received from builder.

6. Certificate from supplier stating that “that he has paid tax in respect of the invoices on which refund is being claimed by the applicant that he has not adjusted the tax amount involved in these invoices against his tax liability by issuing credit note; and also, that he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated;”.

Important note: –

> Refund application will be supplier wise.

Man lo ki aapka 2 builder ke sath agreement cancel hua hai, to aapko 2 application karne padege refund ke lie.

> State wise registration need to obtain.

Suppose aapke 2 agreement cancel hue, ek supplier tha Gujrat ka aur ek supplier tha Maharashtra ka, to appko GST registration dono state mai lena padega. Ek registration Gujrat ke lie aur ek registration Maharashtra ke lie.

>   Refund application is only allowed where the time limit for issuing credit note is expired. Where there is time for issuing credit note, supplier should issue credit note and refund the amount to buyer.

> Time limit for making application for refund is TWO years from the date of of issuance of letter of cancellation of the contract/ agreement for supply by the supplier.