What is the Issue:
There are many issues related to application and calculation of Refunds in certain cases.
Download Circular from here: https://taxupdates.cagurujiclasses.com/8-new-gst-circular-dated-17-july-2023/
Clarification:
Refund of accumulated input tax credit under Section 54(3) on the basis of that available as per GSTR-2A or 2B
This confusion raised due to changes in ITC rules from 9 October 2019 till 1 Jan 2022, Before 1 Jan 2022 Rule 36(4) was active and ITC was based on GSTR-2A but w.e.f 1 Jan 2022 as per clause (aa) of Section 16(2) ITC is based on GSTR-2B only.
Clarified that:
As the said amendments in section 16(2) (aa) of CGST Act and Rule 36(4) of CGST Rules have been brought into effect from 01.01.2022, therefore, the said restriction on availability of refund of accumulated input tax credit for a tax period on the basis of the credit available as per FORM GSTR-2B for the said tax period or for any of the previous tax periods, shall be applicable for the refund claims for the tax period of January 2022 onwards.
However, in cases where refund claims for a tax period from January 2022 onwards has already been disposed of by the proper officer before the issuance of this circular, in accordance with the extant guidelines in force, the same shall not be reopened because of the clarification being issued by this circular.
Requirement of the undertaking in FORM RFD 01 inserted vide Circular No. 125/44/2019-GST dated 18.11.2019 (Download Mega Circular 125: https://taxinformation.cbic.gov.in/view-pdf/1002941/ENG/Circulars)
Clarified that:
Section 42 of CGST Act has been omitted w.e.f. 1st October, 2022 vide Notification No. 18/2022-CT dated 28.09.2022. Further, an amendment has also been made in Section 41 of the CGST Act, wherein the concept of provisionally accepted input tax credit has been done away with. Besides, FORM GSTR-2 and FORM GSTR-3 have also been omitted from CGST Rules. In view of this, reference to section 42, FORM GSTR-2 and FORM GSTR-3 is being deleted from the said para in the Circular as well as from the said undertaking.
Para 7 of Circular No. 125/44/2019-GST dated 18.11.2019 & the undertaking in
FORM GST RFD-01 may, therefore, be read as follows:
Para 7: “The applicants 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 of clause (c) of subsection (2) of section 16 of the CGST Act have not been complied with in respect of the amount refunded.
This undertaking should be submitted electronically along with the refund claim.”
Undertaking in FORM GST RFD 01:- “I hereby undertake to pay back to the Government the amount of refund sanctioned along with interest in case it is found subsequently that the requirements of clause (c) of subsection (2) of section 16 of the CGST/ SGST Act have not been complied with in respect of the amount refunded.”
Consequentially, Annexure-A to the Circular No. 125/44/2019-GST dated 18.11.2019
also stands amended to the following extent:
i. “Undertaking in relation to sections 16(2)(c) and section 42(2)” wherever mentioned in
the column “Declaration/Statement/Undertaking/Certificates to be filled online” may
be read as “Undertaking in relation to sections 16(2)(c)”.
ii. “Copy of GSTR-2A of the relevant period” wherever required as supporting documents
to be additionally uploaded stands removed/deleted.
iii. “Self-certified copies of invoices entered in Annexure-B whose details are not found in
GSTR-2A of the relevant period” wherever required as supporting documents to be
additionally uploaded stands removed/deleted.
Manner of calculation of Adjusted Total Turnover under Rule 89(4) of CGST Rules consequent to Explanation inserted in Rule 89 (4) vide Notification No. 14/2022- CT, dated 05.07.2022
Doubts have been raised as regarding calculation of “adjusted total turnover” under rule 89 (4) of CGST Rules, in view of insertion of Explanation in rule 89(4) of CGST Rules vide Notification No. 14/2022-Central Tax dated 05.07.0222.
Clarification is being sought as to whether value of goods exported out of India has to be considered as per Explanation under rule 89 (4) for the purpose of calculation of “adjusted total turnover” in the formula under the said sub-rule.
In this regard, it is mentioned that consequent to amendment in definition of the “Turnover of zero-rated supply of goods” vide Notification No. 16/2020-Central Tax dated 23.03.2020, Circular 147/03/2021-GST dated 12.03.2021 was issued which inter alia clarified that the same value of zero-rated/ export supply of goods, as calculated as per amended definition of “Turnover of zero-rated supply of goods”, needs to be taken into consideration while calculating “turnover in a state or a union territory”, and accordingly, in “adjusted total turnover” for the purpose of sub-rule (4) of Rule 89.
On similar lines, it is clarified that consequent to Explanation having been inserted in sub-rule (4) of rule 89 of CGST Rules vide Notification No. 14/2022- CT dated 05.07.2022, the value of goods exported out of India to be included while calculating “adjusted total turnover” will be same as being determined as per the Explanation inserted in the said sub-rule.
Clarification in respect of admissibility of refund where an exporter applies for refund subsequent to compliance of the provisions of rule 96A(1)
References have been received citing the instances where exporters have voluntarily made payment of due integrated tax, along with applicable interest, in cases where goods could not be exported or payment for export of services could not be received within time frame as prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A of CGST Rules.
Clarification is being sought as to whether subsequent to export of the said goods or as the case may be, realization of payment in case of export of services, the said exporters are entitled to claim not only refund of unutilized input tax credit on account of export but also refund of the integrated tax and interest so paid in compliance of the provisions of sub-rule (1) of rule 96A.of CGST Rules.
It is mentioned that in terms of sub-rule (1) of rule 96A of the CGST Rules, a registered person availing of the option to export without payment of integrated tax is required to furnish a bond or a Letter of Undertaking (LUT), prior to export, binding himself to pay the tax due along with applicable interest within a period of –
(a) fifteen days after the expiry of three months, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the goods are not exported out of India; or
(b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue of the invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange or in Indian rupees, wherever permitted by the Reserve Bank of India
In this context, it has been clarified inter alia in para 45 of Circular No. 125/44/2019 –
GST dated 18.11.2019 that:
“…….exports have been zero rated under the IGST Act and as long as goods have
actually been exported even after a period of three months, payment of Integrated
tax first and claiming refund at a subsequent date should not be insisted upon. In
such cases, the jurisdictional Commissioner may consider granting extension of time
limit for export as provided in the said sub-rule on post facto basis keeping in view
the facts and circumstances of each case. The same principle should be followed in
case of export of services”
Further, in Para 44 of the aforesaid Circular, it has been emphasized that the substantive
benefits of zero rating may not be denied where it has been established that exports in terms of
the relevant provisions have been made.
The above clarifications imply that as long as goods are actually exported or as the case
may be, payment is realized in case of export of services, even if it is beyond the time frames
as prescribed in sub-rule (1) of rule 96A, the benefit of zero-rated supplies cannot be denied to
the concerned exporters.
Accordingly, it is clarified that in such cases, on actual export of the goods or as the case may be, on realization of payment in case of export of services, the said exporters would be entitled to refund of unutilized input tax credit in terms of sub-section (3) of section 54 of the CGST Act, if otherwise admissible.
It is also clarified that in such cases subsequent to export of the goods or realization of
payment in case of export of services, as the case may be, the said exporters would be entitled
to claim refund of the integrated tax so paid earlier on account of goods not being exported, or
as the case be, the payment not being realized for export of services, within the time frame
prescribed in clause (a) or (b), as the case may be, of sub-rule (1) of rule 96A.
It is further being clarified that no refund of the interest paid in compliance of sub-rule (1) of rule 96A shall be admissible.
It may further be noted that the refund application in the said scenario may be made
under the category “Excess payment of tax”. However, till the time the refund application
cannot be filed under the category “Excess payment of tax” due to non-availability of the
facility on the portal to file refund of IGST paid in compliance with the provisions of sub-rule
(1) of rule 96A of CGST Rules as ”Excess payment of tax”, the applicant may file the refund
application under the category “Any Other” on the portal.
Practical Course at:
