Various representations have been received seeking clarification on issues relating to refund. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, 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 as detailed.
Rejection of refund on account of ineligible ITC:
Rejection of refund for any reason other than eligible credit:
1. Goods / supplies which has been imported on which benefit of reduced tax or no tax incidence under certain specified notification has been availed (i.e. Advance Authorization/EPCG), shall not be eligible for refund on integrated tax paid on export of goods or services.
Doubts have been raised in case of claims for refund filed by an Input Service Distributor (ISD for short), a person paying tax under section 10 of the CGST Act (composition taxpayer for short)or a non-resident taxable person in light of para 2.0 of Circular No. 24/24/2017-GST dated 21.12.2017 which mandates that the refund claim for a tax period may be filed only after filing the details in FORM GSTR-1 for the said tax period and that it is also to be ensured that a valid return in FORM GSTR-3B has been filed for the last tax period before the one in which the refund application is being filed.
Al respecto, se remite al subapartado (1) del artículo 37 de la Ley CGST, en relación con la regla 59 de las Reglas del Impuesto Central sobre Bienes y Servicios de 2017 (Reglas CGST, por sus siglas), que establece que toda persona registrada, salvo un distribuidor de servicios de entrada, una persona imponible no residente o una persona que pague impuestos conforme a las disposiciones del artículo 10, 51 o 52, deberá proporcionar los detalles de las operaciones de salida de bienes o servicios, o ambos, efectuadas durante un periodo impositivo en el FORMULARIO GSTR-1. Asimismo, conforme al subapartado (2) del artículo 39 de la Ley CGST, en relación con la regla 62 de las Reglas CGST, un contribuyente bajo el régimen de composición debe presentar la declaración en el FORMULARIO GSTR-4; conforme al subapartado (4) del artículo 39 de la Ley CGST, en relación con la regla 65 de las Reglas CGST, un distribuidor de servicios de entrada debe presentar la declaración en el FORMULARIO GSTR-6 y, conforme al subapartado (5) del artículo 39 de la Ley CGST, en relación con la regla 63 de las Reglas CGST, una persona imponible no residente debe presentar la declaración en el FORMULARIO GSTR-5.
Por lo tanto, se aclara que, en caso de una solicitud de reembolso del saldo en el libro mayor de efectivo electrónico presentada por un distribuidor de servicios de entrada o un contribuyente bajo el régimen de composición; y para la solicitud de reembolso del saldo en el libro mayor de efectivo y/o crédito electrónico por parte de una persona imponible no residente, la presentación de los detalles en el FORMULARIO GSTR-1 y la declaración en el FORMULARIO GSTR-3B no es obligatoria. En su lugar, la declaración en el FORMULARIO GSTR-4 presentada por un contribuyente bajo el régimen de composición, los detalles en el FORMULARIO GSTR-6 presentados por un distribuidor de servicios de entrada y la declaración en el FORMULARIO GSTR-5 presentada por una persona imponible no residente serán suficientes para solicitar dicho reembolso.
Se ha manifestado que, al presentar la declaración en el FORMULARIO GSTR-3B para un periodo impositivo determinado, ciertas personas registradas cometieron errores al declarar la exportación de servicios con pago de impuesto integrado o suministros con tasa cero realizados a un desarrollador de una Zona Económica Especial o a una unidad de una Zona Económica Especial con pago de impuesto integrado. Han incluido dichos suministros en la tabla bajo la columna 3.1(a) en lugar de incluirlos en la columna 3.1(b) del FORMULARIO GSTR-3B , a pesar de haber mostrado los detalles correctos en la Tabla 6A o 6B del FORMULARIO GSTR-1 para el periodo impositivo correspondiente y haber cumplido debidamente con sus obligaciones fiscales. Dichas personas registradas no pueden presentar la solicitud de reembolso en el FORMULARIO GST RFD-01A para el reembolso del impuesto integrado pagado por la exportación de servicios o por suministros realizados a un desarrollador o unidad de una Zona Económica Especial en el portal común de GST debido a una validación integrada en el sistema que limita el monto del reembolso solicitado (impuesto integrado/tasa) al monto del impuesto integrado/tasa mencionado en la columna 3.1(b) del FORMULARIO GSTR-3B (suministros con tasa cero) presentado para el periodo impositivo correspondiente.
Al respecto, se aclara que, para los periodos impositivos comprendidos entre el 01.07.2017 y el 31.03.2018, se permitirá a dichas personas registradas presentar la solicitud de reembolso en el FORMULARIO GST RFD-01A en el portal común, a condición de que el monto del reembolso del impuesto integrado/tasa solicitado no sea superior al monto total del impuesto integrado/tasa mencionado en la tabla bajo las columnas 3.1(a), 3.1(b) y 3.1(c) del FORMULARIO GSTR-3B presentado para el periodo impositivo correspondiente.
Se han planteado dudas sobre si un exportador tiene derecho a solicitar el reembolso del crédito fiscal de entrada no utilizado de la tasa de compensación pagada sobre insumos, cuando el producto final no está sujeto a dicha tasa. Por ejemplo, se aplica una tasa al carbón, que es un insumo para la fabricación de productos de aluminio, mientras que no se aplica ninguna tasa a los productos de aluminio.
Al respecto, el artículo 16(2) de la Ley del Impuesto Integrado sobre Bienes y Servicios de 2017 (Ley IGST, por sus siglas) establece que, sujeto a las disposiciones del artículo 17(5) de la Ley CGST, se puede utilizar el crédito fiscal de entrada para realizar suministros con tasa cero. Además, conforme al artículo 8 de la Ley del Impuesto sobre Bienes y Servicios (Compensación a los Estados) de 2017 (en adelante, la Ley de Tasas), todos los bienes y servicios especificados en el Anexo de la Ley de Tasas están sujetos a la tasa bajo dicha ley; y mediante el artículo 11(2) de la Ley de Tasas, el artículo 16 de la Ley IGST se aplica mutatis mutandis a los suministros interestatales de todos esos bienes y servicios. Por lo tanto, esto implica que todos los suministros de dichos bienes y servicios tienen tasa cero bajo la Ley de Tasas. Además, dado que el artículo 17(5) de la Ley CGST no restringe la utilización del crédito fiscal de entrada de la tasa de compensación sobre el carbón, se aclara que una persona registrada que realice suministros con tasa cero de productos de aluminio bajo fianza o carta de compromiso (LUT) puede solicitar el reembolso del crédito no utilizado, incluido el de la tasa de compensación pagada sobre el carbón.
Dichas personas registradas también pueden realizar suministros con tasa cero de productos de aluminio con pago de impuesto integrado, pero no pueden utilizar el crédito de la tasa de compensación pagada sobre el carbón para el pago del impuesto integrado, en vista de la disposición del artículo 11(2) de la Ley de Tasas, que permite la utilización del crédito fiscal de entrada de la tasa solo para el pago de la tasa sobre los suministros de salida. En consecuencia, no pueden solicitar el reembolso de la tasa de compensación en caso de suministros con tasa cero con pago de impuesto integrado.
Conforme al artículo 16(2) de la Ley IGST, se puede utilizar el crédito fiscal de entrada para realizar suministros con tasa cero, a pesar de que dicho suministro sea un suministro exento. Por otro lado, conforme al artículo 2(47) de la Ley CGST, el suministro exento incluye el suministro no imponible. Además, conforme al artículo 16(3) de la Ley IGST, una persona registrada que realice suministros con tasa cero tendrá derecho a solicitar el reembolso cuando realice suministros de bienes o servicios, o ambos, bajo fianza o carta de compromiso (LUT), o cuando realice dichos suministros con pago de impuesto integrado.
Sin embargo, en el caso de suministros con tasa cero de bienes exentos o no sujetos a GST, no se puede exigir la presentación de una fianza o LUT. Por lo tanto, se aclara que, con respecto a las solicitudes de reembolso por exportación de bienes no sujetos a GST y bienes exentos sin pago de impuesto integrado, no se requiere LUT/fianza. Dichas personas registradas que exporten bienes no sujetos a GST deberán cumplir con los requisitos prescritos por la legislación vigente (es decir, la Ley Central de Impuestos Especiales de 1944 o la ley de IVA del estado correspondiente) o por la Ley de Aduanas de 1962, si los hubiera.
Asimismo, el exportador tendría derecho al reembolso del crédito fiscal de entrada no utilizado del impuesto central, impuesto estatal, impuesto del territorio de la unión, impuesto integrado y tasa de compensación en tales casos.
Sub-rule (10) of rule 96 of the CGST Rules seeks to prevent an exporter, who is receiving goods from suppliers availing the benefit of certain specified notifications under which they supply goods without payment of tax or at reduced rate of tax, from exporting goods under payment of integrated tax. This is to ensure that the exporter does not utilise the input tax credit availed on other domestic supplies received for making the payment of integrated tax on export of goods.
However, the said restriction is not applicable to an exporter who has procured goods from suppliers who have not availed the benefits of the specified notifications for making their outward supplies. Further, the said restriction is also not applicable to an exporter who has procured goods from suppliers who have, in turn, received goods from registered persons availing the benefits of these notifications since the exporter did not directly procure these goods without payment of tax or at reduced rate of tax.
Thus, the restriction under sub-rule (10) of rule 96 of the CGST Rules is only applicable to those exporters who are directly receiving goods from those suppliers who are availing the benefit under Notification No. 48/2017-Central Tax dated the 18th October, 2017, notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017, or notification No. 41/2017-Integrated Tax (Rate) dated the 23rd October, 2017 or notification No. 78/2017-Customs dated the 13th October, 2017 or notification No. 79/2017-Customs dated the 13th October, 2017.
Further, there might be a scenario where a manufacturer might have imported capital goods by availing the benefit of Notification No. 78/2017-Customs dated 13.10.2017 or 79/2017-Customs dated 13.10.2017. Thereafter, goods manufactured from such capital goods may be supplied to an exporter. It is hereby clarified that this restriction does not apply to such inward supplies of an exporter.
The third proviso to sec 54(3) of the CGST Act states that no refund of ITC shall be allowed in cases where the supplier of goods or services or both avails of drawback in respect of central tax.
1. Supplier availing of drawback only with respect to basic customs duty shall be eligible for refund of unutilized ITC of CGST/SGST/IGST.
2. Refund of eligible ITC on account of State tax shall be available even if the supplier of goods or services or both has availed of drawback in respect of central tax.
1. Taxpayer has committed an error while entering the details of an invoice/shipping bill/bill of export in Table 6A or Table 6B of FORM GSTR-1, he can rectify the same in Table 9 of FORM GSTR-1.
It is advised that while processing refund claims on account of zero rated supplies, information contained in Table 9 of FORM GSTR-1 of the subsequent tax periods should be taken into cognizance, wherever applicable.
2. In case of discrepancies between the data furnished by the taxpayer in FORM GSTR-3B and FORM GSTR-1, the officer shall refer to the circular no. 26/26/2017 – GST dated 29th December, 2017.
Zero rated supplies have been made before filing the LUT and refund claims for unutilized ITC have been filed.
1. 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.
2. The delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case. 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 delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into account the facts and circumstances of each case.
As per Rule 96A(1), the CGST rules provides
a. In case of Exports of Goods against LUT: Exporters shall be liable to pay IGST within 15 days after expiry of 3 months or extended period from the invoice date in case export has not been in such 3 month period.
b. In case of Exports of Services against LUT: Exporters shall be liable to pay IGST within 15 days after expiry of 1 year or extended period from the invoice date, if the payment of such services is not received by the exporter in convertible foreign exchange.
It has been reported that the exporters have been asked to pay integrated tax where the goods have been exported but not within three months from the date of the issue of the invoice for export.
1. It is emphasised that exports have been zero rated under the IGST Act 2017 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.
2. 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.
Clarification has been sought whether with respect to a refund claim, deficiency memo can be issued more than once.
1. Only one deficiency memo for one refund application can be issued unless the deficiencies pointed out in the original memo remain un-rectified.
2. The applicant is required to file a fresh refund application, manually in FORM GST RFD-01A.
3. This fresh application would be accompanied by the following:
a. the original ARN,
b. debit entry number generated originally.
c. a hard copy of the refund application filed online earlier.
Self-declaration with every refund claim to the effect that the claimant has not been prosecuted.
1. Asking for self–declaration with every refund claim where the exports have been made under LUT is not warranted as this requirement is already satisfied in case of exports under LUT.
2. Circular No. 8/8/2017-GST dated 4th October 2017, mentions that a person intending to export under LUT is required to give a self-declaration at the time of submission of LUT that he has not been prosecuted. Persons who are not eligible to export under LUT are required to export under bond.
Whether refund of transitional credit would be allowed.
It is clarified that as the transitional credit pertains to duties and taxes paid under the existing laws viz., under Central Excise Act, 1944 and Chapter V of the Finance Act, 1994, the same cannot be said to have been availed during the relevant period and thus, cannot be treated as part of ‘Net ITC’ and refund cannot be availed under GST. Learn more about IGST Refund be seek
Discrepancy between values of GST invoice and shipping bill/bill of export
Where the refund of unutilized ITC on account of export of goods is claimed and the value declared in the tax invoice is different from the export value declared in the corresponding shipping bill under the Customs Act, refund claims are not being processed.
1. An exporter, at the time of supply of goods, declares that the goods are for export and the same is done under an invoice issued under rule 46 of the CGST Rules.
2. The value recorded in the GST invoice should normally be the transaction value as determined under section 15 of the CGST Act read with the rules made thereunder.
3. The same transaction value should normally be recorded in the corresponding shipping bill/bill of export.
4. The value of the goods declared in the GST invoice and the value in the corresponding shipping bill/bill of export should be examined and the lower of the two values should be sanctioned as refund
It is observed that certain taxpayers have applied for such refund claims in FORM GST RFD-01A.
1. Refunds of tax/duty paid under the existing law shall be disposed of in accordance with the provisions of the existing law.
2. Where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse and will not be transitioned into GST.
3. No refund of the amount of CENVAT credit is granted in case the said amount has been transitioned under GST.
Various representations have been made to the Board regarding the period for which refund applications can be filed.
In many cases, Exports may not be made in period in which the inputs or input services were received and ITC has been availed.
Similarly, there may be cases where exports may have been made in a period but no ITC has been availed in the said period.
1. Exporters, at his option, may file a refund claim for one calendar month/quarter or by clubbing successive calendar months/quarters.
2. The calendar month(s) / quarter(s) for which refund claim has been filed, however, cannot spread across different financial years.
1. The realization of convertible foreign exchange is one of the conditions for export of services.
2. A statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices is required to be submitted along with the claim for refund in case of exports of goods.
3. Insistence on proof of realization of export proceeds for processing of refund claims related to export of goods has not been envisaged in the law and should not be insisted upon.
1. The benefit of supplies at the concessional rate is subject to certain conditions and the said benefit is optional.
2. The exporter will be eligible to take credit of the tax @ 0.05% / 0.1% paid by him.
3. The supplier who supplies goods at the concessional rate is also eligible for a refund on account of inverted tax structure as per the sec 54(3)(ii) of CGST Act.
4. The exporter of such goods can export the goods only under LUT / bond and cannot export on payment of integrated tax.
It has been brought to the notice of the Board that for processing of refund claims, copies of invoices and other additional information are being insisted upon by many field formations.
1. For the processing of refund claims of ITC, verifying the invoice details is quintessential.
2. In a completely electronic environment, the information of the recipients’ invoices would be dependent upon the suppliers’ information, thus putting an in-built check-and-balance in the system.
3. However, as the refund claims are being filed by the recipient in a semi-electronic environment and are completely based on the information provided by them, it is necessary that invoices are scrutinized.
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