The government has vide circular no. 188/20/2022 – GST dated 27.12.2022 has clarified the procedure for claiming GST refund of the unregistered persons. In this article an attempt is made to understand the said clarification in detail:-
1. Under which situations the unregistered person can claim GST refund?
Ans.
a. The unregistered buyers, who had entered into an agreement/ contract with a builder for construction of flats/ building, etc. and had paid the amount towards consideration for such service, either fully or partially, along with applicable tax, had to get the said contract/ agreement cancelled subsequently due to non-completion or delay in construction activity in time or any other reasons or if the unregistered person has paid tax at a higher rate of tax (i.e. if the applicant has applied for the Credit Linked Subsidy Scheme (Pradhan Mantri Awas Yogana scheme).
b. In cases of long-term insurance policies where premium for the entire period of term of policy is paid upfront along with applicable GST and the policy is subsequently required to be terminated prematurely due to some reasons.
2. Can a GST refund be claimed even if there is an option for the registered persons to issue a credit note for those supplies made to unregistered persons?
Ans. The said refund can only be claimed if the time period for issuing credit note under the provisions of section 34 of the CGST Act has already expired. As before the period ends if there is an refund than the supplier would by themselves would have allowed the refund.
3. Can GST refund be claimed even if there is an option for the registered persons to issue credit note for those supplies made to unregistered persons?
Ans. It would be pertinent to mention that sub-section (1) of section 54 of the CGST Act already provides that any person can claim refund of any tax and interest, if any, paid on such tax or any other amount paid by him, by making an application before the expiry of two years from the relevant date in such form and manner as may be prescribed.
4. What will be the Minimum GST refund amount?
Ans. Sub-section (14) of section 54 of the CGST Act provides that no refund under sub-section (5) or subsection (6) shall be paid to an applicant if the amount is less than one thousand rupees. Therefore, no refund shall be claimed if the amount is less than one thousand rupees.
5. Can one GST refund application will be enough for claiming GST refund from multiple suppliers?
Ans. Separate applications for refund have to be filed in respect of invoices issued by different suppliers.
6. What shall be the due date for filing of GST refund?
Ans. As per sub-section (1) of section 54 of the CGST Act, a time period of two years from the relevant date has been specified for filing an application for a refund.
The relevant date in respect of cases of refund by a person other than the supplier is the date of receipt of goods or services or both by such person in terms of provisions of clause (g) in Explanation (2) under section 54 of the CGST Act. However, in respect of cases where the supplier and the unregistered person (recipient) have entered into a long-term contract/ agreement for the supply, with the provision of making payment in advance or in instalments, for example construction of flats or long-term insurance policies, if the contract is cancelled/ terminated before completion of service for any reason, there may be no date of receipt of service, to the extent supply has not been made/ rendered. Therefore, in such type of cases, it has been decided that for the purpose of determining the relevant date in terms of clause (g) of Explanation (2) under section 54 of the CGST Act, the date of issuance of the letter of cancellation of the contract/ agreement for supply by the supplier will be considered as the date of receipt of the services by the applicant.
7. Documents required for filing GST refund application
Ans.
1. PAN Card
2. Aadhar Card
3. Email ID
4. Phone No.
5. Invoice issued by the supplier
6. Declaration from the supplier
7. Proof of payment made
8. Bank Account details & Cancelled Cheque
8. What time period in which the refund amount would be credited?
Ans. As per Section 54 read with Circular No. 125/44/2019 – GST dated 18.11.2019 the refund amount must be credited within 60 days from the filing of refund application
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