Refund of tax under GST

Under a Self-Assessment tax governance system, it is an obligation of a taxpayer to discharge its tax liability along with interest and penalties. In discharging of this obligation, several instances occur where the taxpayer deposits it tax in excess or avail its entitlement less. Under those circumstances, the, taxpayer is entitled to get refund of the amount of excess deposited to government exchequer.

Refund under GST Law and principle of neutrality

The principle of neutrality is read as “The burden of GSTs themselves should not lie on taxable businesses except where explicitly provided for in legislation”.

GST neutrality is achieved by the multi-stage payment system wherein each business Unit of supply chain pays GST to its supplier(s), on its inputs and recovers GST from its supply receiver(s) on its outputs along with GST on value addition made by it.

To ensure that the correct amount of GST is remitted to tax authorities, input GST incurred by each such taxpayer is offset against its output GST, which resulting in a liability to pay the net amount or balance of those two. The Balance may be positive, zero or negative, resulting which the business Unit will liable to pay or get refund. Thus GST “flows through the business” to the ultimate consumers.

Refund is not always available to the taxpayer but it is subject to certain conditions including doctrine of unjust enrichment and time limit within which the refund claim to be made.

Legal Provisions

All the refund issues are govern by the provisions under Chapter IX of the CGST/SGST Act (Section 54 -58) and Chapter (Rule 89-97) of GST Rules, 2017.

  1. Instances for which refund to be claimed:
  2. Excess balance in Cash ledger

Refund from balance in electronic cash register can be made through the return furnished for the relevant tax period in FORM GSTR-3(monthly return made by regular taxpayers)or FORM GSTR-4 (taxpayer assessed under compounding scheme) or FORM GSTR-7(TDS Return), as the case may be.

As the amount is electronic Cash Register is only deposit, hence, principle of unjust enrichment does not arise. Thus the form GST-RFD-1 is not required to filed with

  1. ‘Exports of goods/services’ and ‘Supply of goods/services to SEZ/EOU’ and other zero rated supply:

Zero-rated supply’ means a supply of any goods or services or both in terms of Section 16 of IGST Act – section 2(23) of IGST Act. Export of goods or services or both and supplies of goods or services or both to SEZ unit or SEZ developer will be zero rated supply – section 16(l) of IGST Act.

The registered person making zero rated supply can claim refund under either of two options – (a) supply goods under bond or LUT without payment of IGST and claim refund of unutilized input tax credit or (b) supply goods on payment of IGST and claim refund of IGST paid on goods and services. The refund will be in accordance with section 54 of CGST Act – section 16(3) of IGST Act.

In case of zero rated supplies made without payment of tax, refund of input tax credit will be available as per proviso (i) to section 54(2) of CGST Act.

No refund of unutilized input tax credit shall be allowed in cases other than exports including zero rated supplies or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies – first proviso to section 54(3) of CGST Act- No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty – second proviso to section 54(3) of CGST Act. No refund of input tax credit shall be allowed if the supplier of goods or services avails duty drawback of CGST/SGST/UTGST or claims refund of IGST paid on such supplies – third proviso to section 54(3) of CGST Act.

  1. Assessment/provisional assessment/ Appeal etc.

If the taxpayer deposited tax in any stage of assessment or under provisional assessment or any amount of GST reduced due to any order by appellate authority etc., GST will be refunded. Such refund shall not be automatically, the taxpayer will require to be filed in Form GST RFD-01.

  1. Payment of pre-deposit etc.

Payment of pre-deposit amount as a condition for entertainment of appeal, which is ultimately allowed in the favour of the taxpayer: thus, resulting in refund of the pre-deposit amount.

  1. ITC accumulated due to inverted duty structure

In case of inverted duty rates i.e. input tax credit more that tax payable on outward supply, there is provision of refund of excess credit under section 54(3) of CGST and SGST Act, refund is not admissible where the rate of output supply is Nil or exempt.

  1. A specialised agency of the UNO etc.

A specialised agency of the UNO etc. entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received.

  1. Payment of tax under wrong head:

Payment of tax wrongly as IGST in lieu of (CGST+SGST); or vice-a-versa subject to prescribed conditions. [Section 19 of the IGST Act and sec 77 of the GST Act.

  1. Time limit for filing claim of refund:

Entitlement of filing of refund claim is subject to time limit as prescribed under Section 54, which provide that any application of refund shall be made within two year from the relevant date. However, for the persons specified under sec 54(2), i.e. United Nation Organisations, embassies, etc., the period shall be 6 months from the last day of the quarter in which such supply was received.

Thus the relevant date is critical to determine time within which the refund claim has to be filed. If the refund claim is filed after the relevant date, the claim would be rejected at the threshold; and there is no provision in the Act to condone the delay in filing of refund claim, thus general provisions of Limitation Act will be applicable.

Relevant Date” means—

  1. Refund is not available in the following cases:

Refund is subject to restriction and in certain circumstances, refund is not available to the taxpayer. The circumstances are as below:

  1. Application made beyond the time limit

As per Section 54(1) any application made after expiry of two year from the relevant date shall not be entertained. There is no provision of condonation of delay under the GST Laws, however the limitation act may play its role.

  1. Refund less than Rupees One Thousand: No refund application shall be entertained for a sum less than Rs. 1000/- [Section 54(14)];
  2. Export of goods subject to the export duty: No refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.
  3. Export of supply where duty drawback is availed: No refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of GST or claims refund of the integrated tax paid on such supplies
  4. Refund Order withhold by Commissioner: As per Section 54(11), where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.
  5. Unjust enrichment: Where the proper officer is satisfied such claimed had been passed on to any other person, then the claim amount shall not be allowed to the applicant but to transfer to the consumer welfare fund.
  6. Application and procedure of refund

Section 54(1) and 54(4) of CGST/SGST Acts, 2017 and Rule 89 of GST Rules, 2017 provides the procedure of making application for refund.

4.1 Applicant : who shall make application for refund

4.1.1    Under normal Supply:

Any person claiming refund of any tax, interest, penalty, fees or any other amount paid by him, the application shall be made in Form GST RFD-01.

  1. Refund of IGST on goods exported out of India shall be governed under rule 96.
  2. Refund made by UNO etc., shall be made in Form GST RFD-10

iii. Balance of cash ledger shall be made in Returns furnish for relevant tax period;

4.1.2    In respect of supplies to a Special Economic Zone unit or a Special Economic Zone developer

(a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorised operations, as endorsed by the specified officer of the Zone;

(b) supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the specified officer of the Zone:

4.1.3    For deemed export:

The application shall be filed by the recipient of deemed export supplies:

4.1.4    Refund application made by a casual taxable person or a non-resident taxable person:

The application shall be made in respect to the advance tax deposit by the registered person, the Refund shall be made only after adjusting the tax payable by the applicant, the refund shall be claimed in the last return required to be furnished by him.

4.1.5    Balance in the electronic cash ledger

Balance in the electronic cash ledger may be made through the return furnished for the relevant tax period.

4.2 Refund Application

An applicant (specialised agency of the United Nations Organisation, etc) shall file an application in Form GST RFD-1, electronically, through the Common Portal either directly or from Facilitation Centre. Refund application has to be supported by prescribed documents evidencing facts that the refund is due to the applicant. Claim for refund relating to balance in the electronic cash ledger in terms of Section 49(6) may be made through the return for the relevant tax period in Form GSTR-3 Form GSTR-4 or Form GSTR-7.

4.2.1 The application for refund shall be accompanied by:

(a) Such documentary evidence as may be prescribed to establish that a refund is due to the applicant, and

(b) Evidence that incidence of duty has not been passed on by him to any other person. However, where the amount claimed as refund is less than two lakh rupees, self-declaration based on documents available with him is sufficient -section 54(4) of CGST Act.

4.2.2 Documentary Evidences under different circumstances

As per Rule 89(2), application shall be accompanied by any of the following documentary evidences, as applicable, to establish that a refund is due to the applicant:

(a) Refund of pre-deposit under Section 107(6) and 112(8)

Section 107(6) and 112(8)

No appeal shall be with Appellate authority/Tribunal, unless the appellant has paid a sum equal to ten percent (additional 20% in the case of tribunal) of amount of tax in dispute arising from the order subject to appeal.

The amount 10% or 30% deposited is commonalty known as pre-deposit. This amount is refundable with interest if the appellant succeed in appeal.

The application for refund of pre-deposited shall contain

(i)     The reference number of the order, and

(ii)   Copy of the order passed by the proper officer or an appellate authority or Appellate Tribunal or court resulting in such refund.

(iii)  Challan or other reference number of the payment of the amount specified in sec 107(6) and sec I l2(8) claimed as refund;

(b) Export of goods: (other than for IGST)

(i)     A statement containing number and date of shipping bills or bills of export; and

(ii)   the number and date of relevant export invoices

(c) Export of services (other than IGST)

(i) A statement containing the number and date of invoices, and

(ii) Relevant Bank Realization Certificates or Foreign inward Remittance Certificates, as the case may be;

(d) Supply of goods to SEZ unit / developer:

(i) A statement containing the number and date of invoices as prescribed in rule;

(ii) Evidence that goods have been admitted in full in the SEZ for authorized operations, as endorsed by specified officer of the Zone.

(e) Supply of services to SEZ unit/developer:

(i) A statement containing the number and date of invoices;

(ii) Evidence regarding receipt of services for authorized operations as endorsed by the specified officer of the Zone;

(iii) Details of payment, along with proof thereof, made by the recipient to the supplier for authorized operations as defined under the SEZ Act, 2005.

(f) Deemed Export of goods:

A statement containing the number and date of invoices along with such other evidence as may be notified in this behalf:

(g) Rate of input tax is higher than that of output tax:

Where the claim pertains to refund of any unutilized input tax credit under sec 54(3), a statement in Annex I of Form GST RFD-01 containing the number and date of invoices received and issued during a tax period in a case;

(h) Finalisation of provisional assessment: The reference number of the final assessment order and a copy of the said order.

(i) Declaration or Certificate from CA/CMA

In addition to above document(s), claimant shall also file a declaration/certificate to the effect that the incidence of tax, interest or any other amount claimed as refund has not been passed on to any other person.

However, a declaration/certificate is not required to be furnished in respect of following cases:

  1. a)    refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies;
  2. b)    Refund of unutilized input tax credit under sec 54(3) i.e., refund of unutilised input tax credit, for zero rated/ inverted /exporter
  3. c)    Refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice conforming to the provisions contained in section 31, has not been issued, or where a refund voucher has been issued;
  4. d)    Refund of tax deposited under wrong head i.e. tax wrongly deposited as CGST / SGST instead of IGST or vice-versa.

(j) Documentary or other evidence

Documentary or other evidence, tax invoice, etc. to establish that –

  1. a)    the amount of tax and interest in relation to which such refund is claimed was collected from or paid by, him; and
  2. b)    the incidence of such tax and interest had not been passed on to any other person.

If the refund amount does not exceed INR 2 lakhs, he may file a declaration certifying that the incidence of such lax and interest had not been passed on to any other person.

(k) Presumption of tax passed to the ultimate consumer

Where the amount of tax has been recovered from the recipient, it shall be deemed that the incidence of tax has been passed on to the ultimate consumer.

4.3 Processing of Refund Application

 

4.3.1 Acknowledgement of Refund Application

The application for refund, other than claim for refund from electronic cash ledger, shall be forwarded to the proper officer who shall, within 15 days of filing of the said application, scrutinize the application for its completeness; and where the application is found to be complete, an acknowledgement in Form GST RFD-02 shall be made available to the applicant through the Common Portal electronically, clearly indicating the date of filing of the claim.

If any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in form GST RFD-03 through the Common Portal electronically, requiring him to file a refund application after rectification of such deficiencies – Rule90(3) of CGST and SGST Rules,2017.

Intimation under SGST also means intimation under CGST and vice versa – Rule 90(4) provides Where deficiencies have been communicated in form GST RFD-03 under the SGST Rules, the same shall also deemed to have been communicated under CGST Rules

4.3.2 Scrutiny of refund claim and passing of order

On receipt of any such application, if the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the ‘Consumer Welfare Fund’, except where taxable person proves that he has not passed on burden of tax to another person.

4.3.3 Time limit for deciding refund claim and interest on delay in refund

The proper officer shall issue the order refusing or accepting refund claim within sixty days from the date of receipt of application complete in all respects – section 54(5) of CGST Act.

If any tax refundable under section 54(5) to any applicant is not refunded within sixty days from the date of receipt of application under section 54(1), interest at such rate not exceeding 6%, as may be specified in the notification issued by the Central or a State Government on the recommendation of the GST Council shall be payable in respect of such refund from the date immediately after the expiry of the sixty days from date of receipt of application under section 54(1) till the date of refund of such tax – section 56 of CGST Act.

Rate of interest – The interest rate notified is 6% w.e.f. 1-7 -2017 – Notification No. 6/2017-IT dated 28-6-2017 and 13/2017-CT dated 28-6-2017.

Interest sixty days after date of order in appeal, if refund was rejected – Where any order of refund arises due to an order passed by an Adjudicating Authority/Appellate Authority / Appellate Tribunal / any Court which has attained finality and the same is not refunded within 60 days from date of receipt of such application filed consequent to such order, interest at such rate not exceeding 9%, as may be specified in the notification issued by the Central or a State Government on the recommendation of the GST Council shall be payable in respect of such refund from the date immediately after the expiry of the sixty, days from date of receipt of application – proviso to section 56 of CGST Act.

Where any interest is due and payable to the applicant under section 56 of CGST Act, the proper officer shall make an order along with a payment advice in form GST RFD-05, specifying therein the amount of refund which is delayed, the period of delay for which interest is payable and the amount of interest payable, and such amount of interest shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund- Rule 94 of CGST Rules, 2017.

Interest only after order of Appellate Authority – If refund is rejected by, adjudicating authority but sanctioned by appellate authority, interest will be payable sixty days after submission of application after receipt of order of appellate authority and not from date or order of adjudicating authority.

4.3.4 Grant of provisional refund in case of exports

Condition under Rule 91(1):

Any person who has, during any period of five years immediately preceding the tax period to which the claim for refund relates prosecuted for any offence under the Act or under an existing law where the amount of tax evaded exceeds two hundred and fifty lakh rupees shall not be entitled to get provisional refund.

In the past scenario refund was one of most difficult task, thus GST Laws provides that the  proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, refund on a provisional basis, ninety percent of the total amount so claimed.

  • The provisional refund will not be available to such category of registered persons as may be notified by the Government on the recommendations of the Council.
  • The 90% of claim shall include only clear ITC, any ITC provisionally accepted, will not be consider under the claim for computation of 90%.
  • The refund so provided shall be subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.

Procedure for granting provisional refund

The proper officer, after scrutiny, of the claim and the evidence submitted in support thereof and on being prima facie satisfied that the amount claimed as refund under rule 91(1) is due to the applicant in accordance with the provisions of section 54(6) of CGST Act, shall make an order in form GST RFD-04, sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of acknowledgement under rule 90(1) or rule 90(2) of CGST Rules – Rule 91(2) of CGST and SGST Rules, 2017.

The proper officer shall issue a payment advice in form GST RFD-05 for the amount sanctioned under rule 91 (2) and the same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund – Rule 9l(3) of CGST and SGST Rules, 2017.

Remaining l0% may be refunded after due verification of documents.

Computation of refund of ITC in zero rated supplies

Rule 89(4) provides the computation method for refund amount in the case of zero-rated supply of goods or services or both:

Refund Amount:  [(Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) X Net ITC]/Adjusted Total Turnover

Where,-

(A) ‘Refund amount” means the maximum refund that is admissible.

(B) Net ITC” means input tax credit availed on inputs and input services during the relevant period.

(C) “Turnover of zero-rated supply of goods’ means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking;

(D) “Turnover of zero-rated supply of services” means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated as follows – Zero-rated, supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period.

(E) “Adjusted Total turnover” means the turnover in a State or a Union territory, as defined under section 2(112) of CGST Act, excluding the value of exempt supplies other than zero-rated supplies, during the relevant period;

(F) “Relevant period’ means the period for which the claim has been filed.

4.3.5 Refund to casual taxable person or non-resident taxable person only after he files all returns

The amount of advance tax deposited by a casual taxable person or a non-resident taxable person under section 27(2) of CGST Act, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39 of CGST Act – section 54(13) of CGST Act. Refund shall be claimed either in the last return required to be furnished by him or only after furnishing of the said last return.

4.4 Refund of tax to specialised agency of the UNO or other notified agencies:

Section 54(2) of the CGST/SGST Acts, provides that the tax borne by UNO or other notified agencies engage in the similar nature of business are allowed the input tax paid as refund. This sub-section covers, inter-alia, the amount refundable to the diplomats, embassies, etc. on inward supplies specified under Section 55.

4.4.1 Refund application

The refund shall be claimed in the FORM GST RFD-10 once in every quarter. The application shall be filed along with a statement of the inward supplies of goods or services or both in FORM GSTR-11, prepared on the basis of the statement of the outward supplies furnished by the corresponding suppliers in FORMGSTR-1.

4.4.2 Acknowledgement

An acknowledgement for the receipt of the application for refund shall be issued in FORM GST RFD-02.

4.4.3 Condition for refund

The refund of tax paid by the applicant shall be available if-

  1. a)    Refund only available if the supplies received from a registered person against a tax invoice.
  2. b)    The supply covered under a single tax invoice exceeds five thousand rupees, excluding tax paid, if any;
  3. c)    name and Goods and Services Tax Identification Number or Unique Identity Number of the applicant is mentioned in the tax invoice; and
  4. d)    Such other restrictions or conditions as may be specified in the notification are satisfied.

4.4.4 Time limit

The time limit for claiming refund shall be 6 months from the last day of the quarter in which such supply was received. [Sec 54(2)]

Where an express provision in a treaty or other international agreement, to which the President or the Government of India is a party, is inconsistent with the provisions of this Chapter, such treaty or international agreement shall prevail.

4.5 Sanction of refund

Refund

Where, upon examination of application, the proper officer is satisfied that a refund under sec 54(5) is due and payable to the applicant, he shall make an order in FORM GST RFD-06, sanctioning the amount of refund to which the applicant is entitled, mentioning therein :

  • amount, if any, refunded to him on a provisional basis under sec 54(6);
  • amount adjusted against any outstanding demand under the Act or under any existing law, and
  • the balance amount refundable.

Refund adjusted against outstanding demand

Where the amount of refund is completely adjusted against any outstanding demand under the Act or under any existing law, an order giving details of the adjustment will be issued in Form GST RFD-07.

Deficiencies

Where any deficiencies are noticed, the proper officer shall communicate the same, to the applicant in Form GST RFD-03 through the Common Portal electronically, requiring him to file a refund application after rectification of such deficiencies.

Non admission or refusal of refund

Where the proper officer is satisfied, for reasons to be recorded in writing, that the whole or any part of the amount claimed as refund is not admissible or is not payable to the applicant, he shall issue a notice in Form GST RFD-08 to the applicant, requiring him to furnish a reply within fifteen days of the receipt of such notice. After considering the reply in Form GST RFD-09, he shall either accept or reject the claim after affording a reasonable opportunity of being heard. The refund order shall be issued in Form GST RFD-06.

Refund of unutilized input tax credit

Subject to the provisions of section 54(10), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period – section 54(3) of CGST Act.[section 54(10) provides for recovery of any penalty, tax or interest from any refund due].

No refund of unutilized input tax credit shall be allowed in cases other than exports including zero rated, supplies or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies – first proviso to section 54(3) of CGST Act.

No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty – second proviso to section 54(3) of CGST Act.

No refund of input tax credit shall be allowed if the supplier of goods or services avails duty drawback of GGST/SGST/UTGST or claims refund of IGST paid on such supplies – third proviso to section 54(3) of CGST Act.

However, drawback of customs duty portion can be availed.

Drawback – ‘Drawback” in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such goods- section 2(42) of CGST Act.

Refund only in case of (a) exports and supplies to SEZ (b) inverted rate structure- Refund will be admissible only in case of physical exports and supplied to SEZ. Provision of ‘deemed export’ has been made in CGST Act. However, there is no specific provision of refund in case of deemed exports or supplies to EOU.

Refund is admissible if GST rate on inputs is higher that GST rate of output supplied. However, refund is not available in cases were supply is exempted or nil rated – first proviso to section 55(3) of CGST Act.

Sanctioning 90% of claim on provisional basis in case of exports – Notwithstanding anything contained in section 54(5) [which states that refund should be credited to Consumer Welfare Fund], the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government, on the recommendations of the Council, refund on a provisional basis, ninety per cent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under section 54(5) for final settlement of the refund claim after due verification of documents furnished by the applicant – section 54(6) of CGST Act.

Refund in case of inverted duty structure

In case of inverted duty rates (i.e. input tax credit more that tax payable on outward supply), there is provision of refund of excess credit under section 54(3) of CGST and SGST Act.

However, this refund is not admissible where the rate of output supply is Nil or exempt. Further, as per proviso (ii) to section 54(3) of CGST and SGST Act, Government can notify supply of goods or services where refund of unutilized input tax credit (ITC) will not be admissible, even if ITC is more that tax payable on output supply. Under these powers, following notifications have been issued.

No refund of ITC even if input tax credit more than GST payable on outward supply – In case of service of construction of complex [specified in Item 5(b) of Schedule-II of CGST Act], refund of unutilized ITC will not be available – Notification No. 15/2017-CT (Rate) dated 28-6-2017.

Calculation of refund in case of inverted duty structure

In the case of refund on account of inverted duty structure, refund of Input TaxCredit will be as per following formula [Rule 89(5) of CGST and SGST Rules,20l7]

Maximum Refund Amount :{([Turnover of inverted rated supply of goods) X Net ITC]/Adjusted Total Turnover} – tax payable on such inverted rated supply of goods.

Net ITC and Adjusted Turnover has same meaning as assigned in rule 89(4) of CGST and SGST Rules.

Refund in case of exports or supplies to SEZ

The taxable person has following options – (a) pay IGST on exports and claim refund of IGST (b) Clear goods for export without payment of IGST and claim refund of Input Tax Credit (c) If his part supplies are exports, he can utilize that credit for payment of GST on supplies within India. In that case he need not apply for refund at all.

Refund of IGST paid on goods exported out of India

A taxable person has option to pay IGST on goods exported out of India and claim refund. He may like to this if he has excess Input Tax Credit which may be otherwise not utilizable. Provisions are contained in rule 96 of CGST and SGST Rules, 2017.

Shipping Bill shall be deemed to be application for refund – Shipping Bill filed by exporter shall be deemed to be application for refund of IGST. Export Manifest or Export Report covering the number and date of shipping bill should have been filed.

The applicant should have filed valid return in form GSTR-3 or GSTR–3B as the case may be – Rule 96(1) of CGST and SGST Rules, 2017.

Details of export invoices shall be transferred to customs electronically– Details of export invoices contained in valid return in form GSTR-3 or GSTR-3B as the case may be shall be transmitted to system designated by Customs. The system shall confirm that the goods have been exporters out of India – Rule 96(2) of CGST Rules, 2017.

Processing of refund by customs system -The system designated by customs will process the refund application on confirmation of export of goods and valid return. IGST in respect of each shipping bill will be transferred to bank account of applicant as mentioned in registration particulars of applicant – Rule 96(3) of CGST Rules, 2017.

Refund paid to outbound tourist

GST is not payable if goods are consumed outside the country. The IGST paid on any supply of goods to outbound tourist shall be refunded, in the manner and subject to such conditions and safeguards as may be prescribed, if such goods are taken out of India – section 15 of IGST Act.

“Tourist” means a person not normally resident in India, who enters India for a stay of not more than six months for legitimate non-immigrant purposes – explanation to section 15 of IGST Act.

 

Writer

CS Sahay Vineet