Any person may make an application to the proper officer of IGST/CGST/SGST for refund of Tax and Interest, if any amount paid by him before the expiry of two years from the relevant date. But any taxable person , claiming any refund of any balance in electronic cash ledger u/s 49, may claim the same in return filed u/s 39.
Timely refund mechanism is essential in tax administration, as it facilitates trade through the release of blocked funds for working capital, expansion and modernizations of existing business.
Situations Leading to Refund Claims
The relevant date provision embodied in Section 54 of the CGST Act, 2017, provision contained in Section 77 of the CGST Act, 2017 and the requirement of submission of relevant documents as listed in Rule 1(2) of Refund Rules is an indicator of the various situations that may necessitate a refund claim. A claim for refund may arise on account of:
1. Export of goods or services.
2. Supplies to SEZs units and developers.
3. Deemed exports.
4. Refund of taxes on purchase made by UN or embassies etc.
5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.
6. Refund of accumulated Input Tax Credit on account of inverted duty structure.
7. Finalization of provisional assessment.
8. Refund of pre- deposit.
9. Excess payment due to mistake.
10. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India.
11. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied.
12. Refund of CGST & SGST paid by treating the supply as intra State supply which is subsequently held as inter-State supply and vice versa.
Thus, practically every situation is covered. The GST law requires that every claim for refund is to be filed within 2 years from the relevant date.
Applicability and Procedure
> Any person may make an application to the proper officer of IGST/CGST/SGST for refund of Tax and Interest, if any amount paid by him before the expiry of two years from the relevant date. But any taxable person , claiming any refund of any balance in electronic cash ledger u/s 49, may claim the same in return filed u/s 39.
> Any specialized agency of United Nation Organization, consulate or embassy of foreign countries or any multilateral Financial Institution or Organization or any person or class of person mentioned under u/s 55, may claim refund of tax paid by it on inward supply before the expiry of six months from the last day of the quarter in which supply was received.
> Taxable person may claim unutilized input tax credit at the end of any tax period. But this can be claimed by
> No refund of input tax credit can be taken, if the export is on the payment of export duty.
> No refund of ITC shall be allowed if supplier of goods or services or both avails duty drawback of central tax or claimed refund of integrated tax.
Grant of Provisional Refund in Case of Zero Rated Supplies
GST law also provides for grant of provisional refund of 90% of the total refund claim, in case the claim relates for refund arising on account of zero rated supplies. The provisional refund would be paid within 7 days after giving the acknowledgement. The acknowledgement of refund application is normally issued within a period of 14 days but in case of refund of integrated tax paid on zero rated supplies, the acknowledgement would be issued within a period of three days. The provisional refund would not be granted to such supplier who was, during any period of five years immediately preceding the refund period, was prosecuted.
Refunds to Casual/Non-Resident Taxable Persons
Casual/Non-resident taxable person has to pay tax in advance at the time of registration. Refund may become due to such persons at the end of the registration period because the tax paid in advance may be more than the actual tax liability on the supplies made by them during the period of validity of registration period. The law envisages refund to such categories of taxable persons also. But the amount of excess advance tax shall not be refunded unless such person has filed all the returns due during the time their registration was effective. It is only after such compliance that refund will be granted.
The applicant needs to file elaborate documents along with the refund claim. Standardized and easy to understand documents have been prescribed. Thus, for every claim, the main document prescribed is a statement of relevant invoices (NOT THE INVOICES ITSELF) pertaining to the claim.
Payment to be Credited Online
The refund claim, wherever due, will be directly credited to the bank account of the applicant. The applicant need not come to the authorities to collect the cheques or for any other issues relating to the refund claim.
In sum, the law envisages a simplified, time bound and technology driven refund procedure with minimal human interface between the taxpayer and tax authorities.