CBIC recently issued Instruction no. 03/2022-GST Dated: 14th June, 2022 on procedure relating to sanction of refund and Post audit of refund orders.
Detailed guidelines for sanction of refund claims had been provided under Circular No.17/17/2017-GST dated 15.11.2017 (for manual processing of refunds) and Circular No.125/44/2019-GST dated 18.11.2019 (for electronic filing and online processing of refunds).
However, considering the inconsistent practices and procedures followed by the Department, the Board has issued this specific instructions/guideline to be followed for sanction, post-audit, and review of refund claims to ensure uniformity of practices.
Instruction issued by department broadly focus on the following:
1. Details to be specified in speaking order
2. Additional details to be in case of Zero-rated supplies (with or without payment of taxes), Inverted duty
3. Additional details in case of refund of tax paid on supplies regarded as deemed export
4. Additional details in case of refund of excess balance in cash ledger
5. Additional details in case of refund files under the other categories
6. Post Audit and Review
Details to be specified in speaking order
1. Period for which refund claim has been filed, date of filing and the category of claim.
2. Check that the refund for the same period under same/any other category is not filed more than once.
3. Details of deficiency memo if any issued previously for the said claim. (RFD-03)
4. Whether the claim has been filed within the limitation of time.
5. Whether all documents uploaded along with the refund claim. Details of documents furnished by the applicant in soft copy or hard copy and confirm if it is in terms of rule 89(2).
6. Whether all the returns due are filed or not, whether any dues are pending for recovery in terms of section 54(10) of the Act.
7. Whether any SCN issued, reply received and Personal hearing details.
8. Discussion and finding in respect of applicant’s submissions, case laws relied upon.
9. Whether provision of unjust enrichment is applicable or not, if yes then Documents if any submitted in terms of section 54(4) of the Act certifying/establishing not passing burden of tax.
Additional details to be in case of Zero-rated supplies (with or without payment of taxes), Inverted duty
1. Whether amount claimed as refund is debited from the electronic credit ledger in terms of rule 89(3).
2. In case of zero-rated supplies with payment of tax – IGST has been paid through GSTR 3B.
3. Calculation given for refund of Export/Zero rated, adjusted aggregate turnover, turnover of inverted duty supplies is correct.
4. Whether the calculation of Net ITC considered is correct and verification of admissibility of ITC as per the provision of Law.
5. Verification of ITC on capital goods not considered in calculation of net ITC.
6. Whether it has been verified that ITC in respect of input service and capital goods not included in net ITC in case of refund under inverted duty structure.
7. Whether it has been verified that all invoice under net ITC claimed are uploaded by supplier in GSTR-1 and are reflected in GSTR-2A of the applicant. GST Circular 135/05/2020 dated 31-03-2020 .
8. In case of export of goods, verification of Shipping bill/Bill of export with ICEGATE
9. in case of export of services, verification of BRC/FIRC or document evidencing receipt of export remittance.
10. In case of supply by DTA to SEZ – Verification that the supply is towards authorized operation as per LOA and the documents are endorsed by specified/authorised officer of the zone or from the SEZ online portal
11. The DTA supplier has received payment for the supply made to SEZ in case of supply of services to SEZ
Additional details in case of refund of tax paid on supplies regarded as deemed export
a) Whether necessary procedure followed while making procurement/supplying of goods as deemed exports. CGST Notification No. 48/2017-Central Tax- Dated: 18th October, 2017.
b) Whether ITC claimed w.r.t the deemed exports has been debited from the electronic -credit ledger of supplier.
c) ITC is not claimed by recipient when the supplier is claiming the refund.
Additional details in case of refund of excess balance in electronic cash ledger
i. the amount claimed for refund has been debited from the electronic cash ledger
ii. the amount of refund calculated in accordance with provision of section 49(6) of the Act.
Additional details in case of refund filed under other categories
a) Verification of correctness of details/documents with GSTR-1, GSTR-3B, ICEGATE portal etc.
b) The details of verification done with the reasons for granting/rejecting the refund.
c) Whether the amount claimed as refund is debited from the electronic credit ledger.
Post Audit and Review
As already mentioned in Circular 17/17/2017-GST dated 15.11.2017, refund claims shall not be subjected to pre-audit. However, the post-audit of refund claims may continue. Considering the large number of refund claims filed in GST, it has been decided that post-audit may henceforth be conducted only for refund claims amounting to Rs. 1 Lakh or more till further instructions.
The following are the guidelines for post-audit and review of refund claims:
1. All the refund orders are to be transmitted in online facility mentioned above after issuance of refund order in RFD-06. The review and post audit officers shall have access to all documents/statement on ACES-GST Portal.
2. To undertake the post-audit of a refund order, a Post-Audit Cell under a DC/AC along with superintendents and inspectors may be created in Commissionerate Headquarters.
3. Post audit to be concluded and findings be communicated within 3 months from the date of issuance of RFD-06 order.
4. The review of refund order has to be concluded at least 30 days before the expiry of the time limit for filing of appeal under section 107(2) i.e., 6 months from the date of RFD-06
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