Interpretation has been provided for the clarification issued by CBIC through Circular no 137/07/2020 dated 13.04.2020.

Due to spread of Novel Corona Virus, various difficulties have been faced by the taxpayers. In order to reduce the burden of taxpayers the government is coming up with various relief measures on day to day basis for facilitating taxpayers in meeting the compliances under the various provisions of GST law.

The issues have been examined and a final clarification has been promulgated by the concerned authority in the queries citied below:

1) An advance is received by a supplier for a Service contract which subsequently got cancelled. The supplier has issued the invoice before supply of service and paid the GST thereon. Whether he can claim refund of tax paid or is he required to adjust his tax liability in his return?

Section 34 of CGST Act, 2017 states that “Where one or more tax invoices have been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the recipient one or more credit notes for supplies made in a financial year containing such particulars as may be prescribed”

There may be a case where a supplier has received consideration in advance for supply of services at a future date that got cancelled subsequently. In such cases, the supplier shall issue Credit Note in terms of section 34 of CGST Act, 2017 and the detail of such credit note shall be furnished in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to the conditions of section 34 of the CGST Act. There is no need to file a separate return form.

However, if there is no output tax liability against which a credit note can be adjusted, registered person may proceed to file claim under “Excess Payment of tax, if any” through FORM GST-RFD 01 as shown below- refund images

2) An advance is received by a supplier for a Service contract which got cancelled subsequently. The supplier has issued receipt voucher and paid the GST on such advance received. Whether he can claim refund of tax paid on advance or he is required to adjust his tax liability in his returns?

♦ Section 31(3)(e) of CGST, Act 2017 states that “Where on receipt of advance payment with respect to supply of any goods or services or both the registered person shall issue a receipt voucher, but subsequently no supply is made and no tax invoice is issued in pursuance thereof, the said registered person may issue to the person who had made the payment, a refund voucher against such payment”. In case supplier issues receipt voucher initially on receipt of advance and subsequently issue refund voucher, then the supplier can claim refund by filing GST RFD 01 under the category “Refund of excess payment of tax”against excess tax paid on advance received.

3) Goods supplied by a supplier under cover of a tax invoice are returned by the recipient. Whether he can claim refund of tax paid or is he required to adjust his tax liability in his returns ?

♦ In such a case where the goods supplied by a supplier are returned by the recipient and where tax invoice had been issued, the supplier is required to issue a “credit note”in terms of section 34 of the CGST Act. He shall declare the details of such credit notes in the return for the month during which such credit note has been issued. The tax liability shall be adjusted in the return subject to conditions of section 34 of the CGST Act. There is no need to file a separate refund claim in such a case.

However, if there is no output tax liability against which a credit note can be adjusted, registered person may proceed to file claim under “Excess Payment of tax, if any”through FORM GST-RFD 01

4) Letter of Undertaking (LUT) furnished for the purposes of zero-rated supplies as per provisions of section 16 of the Integrated Goods and Services Tax Act, 2017 read with rule 96A of the CGST Rules has expired on 31.03.2020.

Whether a registered person can still make a zero-rated supply on such LUT and claim refund accordingly or does he have to make such supplies on payment of IGST and claim refund of such IGST?

Notification No 37/2017- Central Tax dated 04.10.2017 requires LUT to be furnished for a financial year. However as per Notification No 35/2020- Central Tax dated 03.04.2020, requirement of furnishing of any report, documents, return, statements or such other record falls during the period between the period from 20.03.2020 and 29.06.2020, has been extended till 30.06.2020.

Referring to the above notification, time limit for filing LUT for the financial year 2020-2021 has also been extended till 30.06.2020 and the tax payer can continue to make the supply without payment of tax under LUT provided the GST FORM RFD 11 for 2020-2021 is furnished on or before 30.06.2020. In such case the taxpayer may provide reference no of the LUT for the year 2019-2020 in the relevant documents.

5) While making the payment to recipient, amount equivalent to one per cent was deducted as per the provisions of section 51 of Central Goods and Services Tax Act, 2017 i. e. Tax Deducted at Source (TDS). Whether the date of deposit of such payment has also been extended vide notification N. 35/2020-Central Tax dated 03.04.2020?

♦ FORM GSTR-7 is a monthly return required to be furnished by all taxable persons who are required to deduct TDS (Tax Deducted at Source) as per section 51 of CGST Act,2017 and the same shall be filed on or before 10th of subsequent month.

As per Notification No 35/2020 Central Tax dated 03.04.2020, requirement of furnishing of any report, documents, return, statements or such other record falls during the period between the period from 20.03.2020 and 29.06.2020, has been extended till 30.06.2020. Since the word “any return”has been issued in the mentioned notification no, the due date of filing GSTR 7 has also been extended till 30.06.2020

6) As per section 54 (1), a person is required to make an application before expiry of two years from the relevant date. If in a particular case, date for making an application for refund expires on 31.03.2020, can such person make an application for refund before 29.07.2020?

♦ As per section 54 of CGST Act,2017, application for refund shall be made before the expiry of two years from the “relevant date”. Notification No 35/2020 Central tax dated 03.04.2020 clearly states that furnishing of any report, documents, return, statements or such other record falls during the period between the period from 20.03.2020 and 29.06.2020, has been extended till 30.06.2020. Accordingly, the due date for filing an application for refund falling during the said period has also been extended till 30.06.2020

Author Bio

Qualification: CA in Job / Business
Company: P.D RUNGTA & CO.
Location: Kolkata, West Bengal, IN
Member Since: 10 Apr 2020 | Total Posts: 2

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