GST Clarification on GST refund
issues.
Ministry of Finance, Department
of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular
No. 135/05/2020 - GST dated 31st March, 2020 issued and has published Clarification
on refund related issues.
Ø
Overview:
In exercise of its powers conferred by section
168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred
to as “CGST Act”), hereby clarifies the issues detailed issues relating to GST
refunds hereunder:
1. Bunching of refund claims across Financial Years
a)
Circular No. 37/11/2018-GST dated 15.03.2018 was
rescinded being subsumed in the Master Circular on Refunds No. 125/44/2019-GST dated
18.11.2019 and the said restriction on the clubbing of tax periods across financial
years for claiming refund thus has been continued vide Paragraph 8 of the
Circular No. 125/44/2019-GST dated 18.11.2019, which is reproduced as under:
“8. The applicant, at his option, may file a refund claim for a
tax period or by clubbing successive tax periods. The period for which refund
claim has been filed, however, cannot spread across different financial years.
Registered persons having aggregate turnover of up to Rs. 1.5 crore in the
preceding financial year or the current financial year opting to file FORM
GSTR-1 on quarterly basis, can only apply for refund on a quarterly basis or
clubbing successive quarters as aforesaid. However, refund claims under categories
listed at (a), (c) and (e) in para 3 above must be filed by the applicant chronologically.
This means that an applicant, after submitting a refund application under any
of these categories for a certain period, shall not be subsequently allowed to
file a refund claim under the same category for any previous period. This
principle / limitation, however, shall not apply in cases where a fresh
application is being filed pursuant to a deficiency memo having been issued
earlier.”
b) Hon’ble Delhi High Court vide para 12 of
the Order dated 21.01.2020, in the case of M/s Pitambra Books Pvt Ltd. has
observed that the Circulars can supplant but not supplement the law. Circulars might
mitigate rigours of law by granting administrative relief beyond relevant
provisions of the statute, however, Central Government is not empowered to
withdraw benefits or impose stricter conditions than postulated by the law.
The issue has been examined and it has been
decided to remove the restriction on clubbing of tax periods across Financial
Years. Accordingly, circular No. 125/44/2019-GST dated 18.11.2019 stands
modified to that extent i.e. the restriction on bunching of refund claims
across financial years shall not apply.
2. Refund of accumulated
input tax credit (ITC) on account of reduction in GST Rate
Refund of accumulated ITC under clause (ii) of
sub-section (3) of section 54 of the CGST Act would not be applicable in cases
where the input and the output supplies are the same.
3. Change in manner of
refund of tax paid on supplies other than zero rated supplies
a) Circular No. 125/44/2019-GST dated
18.11.2019, in para 3, categorizes the refund applications to be filed in FORM
GST RFD-01 as under:
·
Refund of unutilized input tax credit (ITC) on
account of exports without payment of tax;
·
Refund of tax paid on export of services with
payment of tax;
·
Refund of unutilized ITC on account of
supplies made to SEZ Unit/SEZ Developer without payment of tax;
·
Refund of tax paid on supplies made to SEZ
Unit/SEZ Developer with payment of tax;
·
Refund of unutilized ITC on account of
accumulation due to inverted tax structure;
·
Refund to supplier of tax paid on deemed
export supplies;
·
Refund to recipient of tax paid on deemed
export supplies;
·
Refund of excess balance in the electronic
cash ledger;
·
Refund of excess payment of tax;
·
Refund of tax paid on intra-State supply which
is subsequently held to be inter State supply and vice versa;
·
Refund on account of assessment/provisional
assessment/appeal/any other order;
·
Refund on account of “any other” ground or
reason.
b) For the refund of tax paid falling in
categories specified at S. No. (i) to (l) above i.e. refund claims on supplies
other than zero rated supplies, no separate debit of ITC from electronic credit
ledger is required to be made by the applicant at the time of filing refund
claim, being claim of tax already paid.
c) vide notification No.16/2020-Central Tax
dated 23.03.2020, sub-rule (4A) has been inserted in rule 86 of the CGST Rules,
2017 which reads as under:
“(4A) Where a registered person has claimed refund of any amount
paid as tax wrongly
paid or paid in excess for which debit has been made from the
electronic credit ledger, the said amount, if found admissible, shall be
re-credited to the electronic credit ledger by the proper officer by an order
made in FORM GST PMT-03.”
d) Further, vide the same notification, sub-rule (1A) has also
been inserted in rule 92 of the CGST Rules, 2017. The same is reproduced
hereunder:
“(1A)Where,
upon examination of the application of refund of any amount paid as tax other than
the refund of tax paid on zero-rated supplies or deemed export, the proper
officer is satisfied that a refund under sub-section (5) of section 54 of the
Act is due and payable to the applicant, he shall make an order in FORM RFD-06
sanctioning the amount of refund to be paid, in cash, proportionate to the
amount debited in cash against the total amount paid for discharging tax
liability for the relevant period, mentioning therein the amount adjusted
against any outstanding demand under the Act or under any existing law and the balance
amount refundable and for the remaining amount which has been debited from the electronic
credit ledger for making payment of such tax, the proper officer shall issue FORM
GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic
credit ledger.”
4. Guidelines for refunds of Input Tax Credit under Section
54(3)
Refund of accumulated ITC shall be restricted
to the ITC as per those invoices, the details of which are uploaded by the
supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant.
Accordingly, para 36 of the circular No. 125/44/2019-GST, dated 18.11.2019
stands modified to that extent.
5. New Requirement to
mention HSN/SAC in Annexure ‘B’
A suitably modified statement format is
attached for applicants to upload the details of invoices reflecting in their
FORM GSTR-2A. The applicant is, in addition to details already prescribed, now
required to mention HSN/SAC code which is mentioned on the inward invoices. In
cases where supplier is not mandated to mention HSN/SAC code on invoice, the applicant
need not mention HSN/SAC code in respect of such an inward supply.
·
Link of the Circular:
Disclaimer:
IN NO EVENT THE AUTHOR SHALL BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL
OR INCIDENTAL DAMAGE RESULTING FROM OR ARISING OUT OF OR IN CONNECTION WITH THE
USE OF THIS INFORMATION
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