Jaswinder Bedi

As we all are aware that under the GST regime, all the major three acts i.e. Central Excise Act, Service Tax Act & VAT Act are merged and the system prevalent under the GST is creating the refunds, almost for every dealer especially for exporters and the dealers those are purchasing the goods as a raw material at higher rates and ultimately manufacture goods are covered under the Lower Tax ability. So to deal with these types of contingencies and to obtain the refund, there is a special provision of refund in Shrine in the GST Act.

1. Who are eligible for refund?

Following are the conditions, where the refund can be applied:

– Refund of tax paid on Deemed Exports.

– Refund of excess balance in Electronic Cash Ledger.

– Refund of tax paid on zero rated supply of goods or services of both.

– Finalization of provisional assessment.

– Refund for tax paid on purchase made by UN bodies and other Notified Agencies.

– Tax Refund for International Tourists.

– Refund of tax on inputs/input services used in making zero rated supply.

– Refund on account of ITC accumulated due to Inverted Tax Structure.

– On account of appeal/any other adjudication order

2. How to claim refund?

TABLE – I – Refund in case of Export on payment of IGST

  • A registered person is able to clear the goods for export either without paying IGST under Letter of Undertaking (LOU) and can claim refund ITC. Or he can pay IGST and claim refund of tax paid.
  • If there is ITC of GST in balance which cannot be used otherwise, the registered person could clear the goods on payment of IGST & claim its refund. If not having ITC of GST in balance, he can clear the goods against letter of undertaking. The decision can be made consignment wise.
  • The shipping bill containing details of invoice shall be deemed to be an application for refund of IGST paid. When the exporter will file his monthly GSTR-1 (Table 6A) return & GSTR-3B, details of relevant tax invoice shall be transmitted electronically by common portal to Customs System. The custom system shall process the refund claim and amount of refund will be electronically credited to bank account of exporter.
  • Exporters can check refund status on “icegate.gov.in” by creating their Login by clicking on link,” https://www.icegate.gov.in/Download/New_Registration_Demo_Updated_APPROVED.pdf ” After login go to column “IGST Validation Details Enquiry”. Correct the error mentioned in this column so that your claims for refund are processed at the earliest
  • For complete process & mismatching issue & solutions, pls refer – Circular No. 05/2018-Customs

TABLE–II-Refund of unutilized ITC (Export without payment of IGST & Other cases)

  • Application for refund shall be filed for a tax period in FORM GST RFD-01A online on the common portal.
  • Valid return in FORM GSTR-3B and GSTR-1 has to be filed for the tax period for which refund application has been filed.
  • Registered person applying for refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest in case it is found subsequently that the requirements have not been complied with in respect of the amount refunded.
  • On filing of refund application, an Acknowledgement Reference Number shall be generated.
  • The FORM GST RFD-01A along with the ARN and other necessary documents prescribed in Rule 89(2) of the CGST Rules, 2017 / Circular No. 17/17/2017-GST dated 15.11.2017 needs to be submitted manually in the office of the jurisdictional Tax officer

C. Refund of unutilized ITC to exporters

Refund of any unutilized input tax credit of inputs and input services will be allowed except where the goods exported out of India are subjected to

  • Export duty; or
  • Exporter claims drawback of CGST or refund of IGST paid on such export.

D. Time period for processing the refund application, otherwise interest @ 6%

The amount of refund is required to be sanctioned within 60 days from the date of receipt of application. It is also not disputed that 90% of the amount will be refunded within 7 days from the date of acknowledgment in form GST-RFD-04.

If the amount will not be refunded or the application will not be decided within 60 days then applicant/ claimant is entitled for interest @ 6%.

Refund amount will be credited directly to the claimant’s bank account.

Provisional refund shall be calculated taking into account the total Input Tax Credit, without making any reduction of credit being provisionally accepted.

List of documents required for GST Refund in case Exports

1. RFD 01A Online

2. RFD 01 Manual

3. GSTR 1

4. GSTR 3B

5. Credit ledger ( of Debit of amount on applying of refund)

6. Forwarding letter

7. ARN Receipt received on applying of refund

8. Copies of BRC

9. Copies of Shipping bill

10. Copies Bill of lading

List of documents required for GST Refund in case of Inverted Tax Structure

1. RFD 01A Online

2. RFD 01 Manual

3. GSTR 1

4. GSTR 3B

5. Credit ledger (of Debit of amount on applying of refund)

6. Forwarding letter

7. ARN Receipt received on applying of refund

8. Copies of all the purchase bills of refund period

9. Few copies of sale bill

10. List of all the raw materials used (% of GST, HSN Code)

11. List of goods sold (% of GST, HSN Code)

Note: All the documents have to be self-attested.

  • Time lines have been set for processing of refund claims and claims not settled within 60 days will be paid with interest @6%.
  • Refund amount will be credited directly to the claimant’s bank account.
  • The process is online and hassle free and with minimum interface with tax authorities.

E. Limitation period for filing the claim of refund

The refund claim has to be filed within two years from the relevant date.

F. Refund can be claimed even if payment was made in wrong head

A claimant can apply for refund of amount of tax which was wrongly deposited. To deal with this situation the taxable person is to file the refund application for the amount of wrongly credited in the Electronic Cash Ledger.

Conclusion: It is an effort to compile the provisions of refund under the GST Act beside this during the process of refund application it is observed that still the claimant is to submit number of documents while filing the application manually which is creating unnecessary trouble in the business community. So it is very important to make issue the necessary  instructions to the offices so that unnecessary documents should not be called for.

(The author can be reached at bediadvocate@yahoo.co.in)

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  1. V Aranganathan says:

    Refund procedure is explained in detail. Thank you. In case of export of services where the invoice is generated once in two or three months and the payment is received after two months from the date of invoice. Can you tell us how to file the refund application RFD 01A, which is required to be filed monthly?

  2. RAJESH SAHA says:

    a good description for export refund under LUT bond..it will help me too much…thank you..kindly help me if i was not include IE Code previously when migrated from VAT any problem occured in the process of refund??

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September 2020