Devolución de GST: Valor de factura frente a valor de conocimiento de embarque

In case of export of goods without payment of IGST under Letter of Undertaking (LUT) or Bond, the taxpayer is entitled to claim refund of accumulated Input Tax Credit. For this purpose, taxpayer is required to file a refund application in Form GST RFD-01 along with all supporting documents. While processing the refund application, All zero-rated supplies are cross-checked with Shipping bills available on ICEGATE gateways. However, one of the major issue notice while processing refund applications is the difference in value of Invoice and corresponding value declared on Shipping Bill.

Due to this reason various GST refund applications have been put to hold or have been rejected. Now, the GST refund is being processed by the department in these cases. However, disputes are still going around about which value should be considered while computing the admissible refund amount under Rule 89(4) of CGST Rules.

This issue has been discussed in detail in this article:

1. Invoice Value Vs Shipping Bill Value on export Invoices

• As per Common trade practice, export and import transactions are carried out as per INCOTERMS, i.e., a set of internationally recognized rules which define the responsibilities of sellers and buyers in the export transaction.
• As per INCOTERMS, an export transaction can be carried out on FOB, CIF, C & F etc. terms.
• On Free on Board (FOB) basis, property/ Ownership in goods is transferred at the time of loading of goods on ship at the seller's port. The responsibility of taking goods to the port of buyer is of the buyer. Therefore, the entire cost of freight and insurance of transit is borne by the buyer. Consideration charged by the seller in these cases contains sales price and freight & Insurance from seller’s premises to the seller’s port of export.
• In case of Cost, Insurance & Freight (CIF) Contract, ownership is transferred to the buyer at the time goods reach the port of buyer. Therefore, the cost of freight and insurance of transit is borne by the seller. Consideration charged by the supplier includes both sales consideration and cost of freight and insurance.

1.1 What is Invoice Value

• In case of export of goods, the taxpayer is required to prepare a tax invoice in accordance with provisions of GST Law.
• As per Section 15 of CGST Act, applicable to IGST Act as well, value of supply of goods shall be as follows:
  • Section 15(1): Value of supply shall be the transaction value, i.e., price actually paid or payable for such supply.
  • Section 15(2)(c): value of supply shall include incidental expenses charged by the supplier to the recipient for anything done by the supplier with respect to such supply before delivery of goods.

• Therefore, as per Section 15 of CGST Act, in case of CIF contracts, value of invoice shall be considered charged by the supplier, including value of freight and insurance.

1.2 What is Value declared on Shipping Bill

• As per custom law, while filing a shipping bill, the exporter is required to declare FOB value on the Shipping bill even in case of CIF Contract.
• On ICEGATE as well, FOB value of the invoice appears.
• In certain cases as well, taxpayers declares different value on shipping bill as compared to invoice value 

2. Which value is to be considered while processing refund applications under GST

• This has been brought to the notice of CBIC while processing refund of accumulated ITC on account of export of goods without payment of IGST, there are various cases where the value declared in the tax invoice is different from the export value declared in the corresponding shipping bill under the Customs Act.

• Therefore, CBIC has clarified the issue vide Para 9 of circular No. 37/11/2018-GST dated 15th March, 2018 which states:
  • Zero-rated supply of goods is effected under the provisions of the GST laws. 
  • 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.
  • The value recorded in the GST invoice should normally be the transaction value determined in accordance with Section 15 of CGST Act.
  • The same transaction value should normally be recorded in the corresponding shipping bill / bill of export. 
  • However, During the processing of the refund claim, the value of the goods declared in the GST invoice and the value in the corresponding shipping bill should be examined and the lower of the two values should be sanctioned as refund.

• Therefore, as per clarification issued by department, in case of difference in invoice value and shipping bill value, lower of the two values should be taken to sanction the refund.

3. Computation of Refund Amount

• As per Rule 89(4) of CGST Rules, In case of zero-rated supply of goods without payment of IGST under LUT or Bond, Refund of ITC to be granted shall be computed by following formula:

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover

• Turnover of Zero-rated supply of goods shall be lower of the following amount:
  • the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking; or 
  • 1.5 times value of the like goods domestically supplied by the supplier.

• “Adjusted Total Turnover” shall:
  • Include:
    • the turnover in a State or a Union territory, as defined under Section 2(112) of CGST Act,, excluding the turnover of services; and
    • the turnover of zero-rated supply of services and non-zero-rated supply of services,
  • Exclude:
    • the value of exempt supplies other than zero-rated supplies; and
    • the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any,.

4. Issue arises in the computation of refund amount

• Al calcular el importe de la devolución según la Regla 89(4) de las Normas CGST, los funcionarios de GST consideraron el menor entre el valor de la factura y el valor del conocimiento de embarque, tal como se aclaró en la circular n.º 37/11/2018-GST de fecha 15 de marzo de 2018.

• Al calcular el importe de la devolución según la regla 89(4), el funcionario competente consideró el importe menor al calcular el valor de la "Facturación de suministros con tasa cero" de bienes en el numerador, conforme a la aclaración emitida por el departamento.

• Sin embargo, al calcular la facturación total ajustada, el funcionario competente considera el valor de la factura en lugar del menor entre los valores de la factura. Por lo tanto, esto resultó en la concesión de un importe de devolución reducido a los contribuyentes.

• P. ej.

5. Aclaración sobre el cálculo de la "Facturación total ajustada"

• La CBIC ha aclarado el método de cálculo de la "Facturación total ajustada" en el párrafo 4 de la Circular n.º 147/03/2021-GST de fecha 12 de marzo de 2021.

• Según la circular, el valor de la facturación total ajustada incluye la facturación en un Estado o Territorio de la Unión, tal como se define en la sección 2(112) de la Ley CGST.

• Según la Sección 2(112) de la Ley CGST de 2017, "Facturación en un Estado o facturación en un Territorio de la Unión" significa el valor agregado de:

• todos los suministros sujetos a impuestos (excluyendo el valor de los suministros internos sobre los cuales el impuesto debe ser pagado por una persona bajo el régimen de inversión del sujeto pasivo);
• suministros exentos realizados dentro de un Estado o Territorio de la Unión por una persona sujeta a impuestos,
• exportaciones de bienes o servicios o ambos; y
• suministros interestatales de bienes o servicios o ambos realizados desde el Estado o Territorio de la Unión por dicha persona sujeta a impuestos
• pero excluye el impuesto central, el impuesto estatal, el impuesto del Territorio de la Unión, el impuesto integrado y el gravamen".

• La "Facturación total ajustada" incluye la "Facturación en un Estado o facturación en un Territorio de la Unión". Según la Sección 2(112) de la Ley CGST de 2017, la "Facturación en un Estado o facturación en un Territorio de la Unión" incluye el valor de la exportación o el valor del suministro con tasa cero. Por lo tanto, el valor del suministro con tasa cero calculado a efectos de la Regla 89(4) de las Normas CGST debe considerarse al calcular la "Facturación en un Estado o facturación en un Territorio de la Unión". En consecuencia, la "Facturación total ajustada" incluirá el valor del suministro con tasa cero calculado a efectos de la Regla 89(4) de las Normas CGST.

• Por lo tanto, se debe considerar el menor entre el valor de la factura y el valor del conocimiento de embarque para el cálculo tanto del "Suministro con tasa cero" como de la "Facturación total ajustada".