Published Tue, 21 Mar 2023 | Updated Thu, 01 Jun 2023 Goods and Service Tax
The provisions related to refund claims which are contained in the GST laws, aim to streamline and standardize the refund process under the GST regime. Thus, under the GST regime Government aims to create a standardized form for making various kinds of claims for refunds. The procedure of claim and sanction will be completely online and time-bound which is a parting from the existing time-consuming and cumbersome procedure under previous law regimes.
The Situation Leading to Refund Claims
As per the provision of section 54 of CGST Act, 2017, and the requirement of submission of relevant documents as listed in relevant rules in CGST Rules, 2017 is an indicator of the various situations that may necessitate a refund claim. A claim for refund can arise because of:
- Export of Goods or services
- Supplies to SEZs units and developers
- Deemed Export supplies
- Refund of taxes on purchase made by UN or embassies etc.
- Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court.
- Refund of accumulated Input Tax Credit on account of inverted duty structure
- Finalisation of provisional assessment
- Refund of pre-deposit
- Excess payment due to mistake
- Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their Departure from India
- Refund on account of issuance of refund vouchers for taxes paid on advances against which goods of Services have not been supplied.
- Refund of CGST & SGST paid by treating the supply as intra-State supply which is subsequently held as inter-State supply and vice versa.
Time Limit For Filing Refund Claim
Any person claiming the refund of the GST tax, or the interest paid should make an application within a period of two years from the relevant date using the Form GST RFD-01 electronically. A registered person may claim the balance available in the electronic cash ledger by filing the return as per the dates mentioned under GST.
Procedure for Filing Refund Claim Under GST
- File for GST-RFD-01 along with the required documents in Annexure-1 to the form.
- The assessee shall receive an acknowledgment in GST-RFD-02 if there are no problems with the application in GST-RFD-01. In case of any issues, it will be communicated in GST-RFD-03.
- The Proper Officer may pass an order in GST-RFD-04 sanctioning the amount due within 7 days from the date of the acknowledgment if the Proper Officer is prima facie satisfied.
- The Proper Officer shall pass an order for refund in GST-RFD-06 and issue a payment advice in form GST-RFD-05 post which the amount automatically gets credited to the bank account of the registered person which has been selected at the time of filing of form GST-RFD-01.
- The order has to be passed within 60 days from the date of receiving a complete application.
- In the case of export supplies, the Act also provides for a provisional refund of 90% of the refund claim within 7 days of the date of the acknowledgment provided the supplier was not prosecuted anytime in the 5 years immediately preceding the refund period.
What are the conditions for claiming a refund in all the cases except the export of goods on payment of IGST?
The conditions for claiming a refund in all the cases except the export of goods on payment of IGST are:
- An application must be made within 2 years from the relevant date
- GSTR-3B for the relevant tax period should have been filed
- The outward supplies are other than nil rated or exempt supplies
- In the case of goods exported they were not subjected to export duty
- No drawback of central tax or claims refund of integrated tax paid on supplies has been availed
- In case of Casual Taxable Person or Non-Resident Taxable Person, all monthly returns have been filed during the period of registration.
- In case of CGST and SGST/ UTGST paid on intra-state supply but held as inter-state supply, the appropriate amount of IGST has been paid [Note: In case IGST had been paid instead of CGST and SGST/ UTGST, no refund would be available].
PROCEDURE FOR CLAIMING REFUND OF IGST PAID ON EXPORT OF GOODS
The shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when:-
- The person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export; and
- The applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be.
- Till the time GSTR-3 not available for filing, the valid form can be furnished in form GSTR-3B and GSTR-1, and on the basis of such forms, refunds can be granted in the cases where the filing of GSTR-3 is mandatory for a claim of refund.
- The details of the relevant export invoices issued for export of goods contained in FORM GSTR-1 is transmitted electronically to the system designated by the Customs and the said system electronically transmits a confirmation that the goods covered by the said invoices have been exported out of India.
- The system designated by the Customs further processes the claim for refund.
- An amount equal to the integrated tax paid in respect of each shipping bill or bill of export is electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities by GSTN.
GST system transmits invoice level data of Table 6A in GSTR-1 subject to the following validations:
- GSTR-3B is filed for the corresponding period, with admitted tax liability under Table 3.1(b);
- Export invoices are submitted in GSTR-1/Table 6A thereof and have the correct shipping bill number, shipping bill date and port code;
- The admitted tax liability of IGST under table 3.1(b) of GSTR-3B, is equal to, or greater than, the IGST amount claimed to have been paid under Table 6A of GSTR-1 of the corresponding period.
The applicant need not file elaborate documents along with the refund claim. Standardized and easy-to-understand documents have been prescribed. Thus, for every claim, the main document prescribed is a statement of relevant invoices (NOT THE INVOICES ITSELF) pertaining to the claim. In case the refund is on account of export of services, apart from the statement of invoices, the relevant bank realization certificates (BRC) or Foreign Inward Remittance Certificate (FIRC) evidencing receipt of payment in foreign currency is also required to be submitted. If it is a claim made by the supplier to the SEZ unit, an endorsement from the proper officer evidencing receipt of such goods/services in the SEZ also needs to be submitted. Further, a declaration is also required from the SEZ unit to the effect that they have not availed input tax credit of the tax paid by the supplier.
If the claim is for a refund of accumulated ITC, only a statement containing invoice details as prescribed in the refund chapter of the CGST Rules, 2017 needs to be given. In case of a claim of refund on account of any order or judgment of appellate authority or court, the reference number of the order giving rise to refund should also be given. For crossing the bar of unjust enrichment, if the refund claim is less than Rs.2 Lakhs, then a self-declaration by the applicant to the effect that the incidence of tax has not been passed to any other person will suffice to process the refund claim. For refund claims exceeding Rs. 2 Lakhs, a certificate from a Chartered Accountant/Cost Accountant will have to be given.
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