The refund of ITC is a key constituent of Goods and Service Tax (“GST”), and it is a pre-requisite for the department to ensure the smooth operation of the same to avoid any unnecessary increase in the cost of goods/services. However, various issues keep on evolving with the use of the system. The government has issued several GST Circulars to curb these issues.
Department has received various representations seeking clarification on some issues related to refund under GST.
We are really pleased to share this with you as our efforts have finally brought the sigh of relief for the taxpayers across the country! A new amendment to the GST Laws is going to allow "Clubbing of GST Refund Claims Across Two Financial Years."
Circular for GST refund claims across two financial years
As per the recent circular, the amendment quoted reference from the M/S Pitambra Books Private Limited petition in Delhi High Court. M/S Pitambra Books Private Limited is one of our most valued clients. We are proud to say that our professional assistance and advice is something that has helped M/S Pitambra Books to file the Writ Application in Delhi Hight Court against the error in the circular restricting our client from claiming a GST refund.
The relief have been given in circular no. 135/05/2020 for allowing clubbing of refund claims across two financial year quoting the reference of M/s Pitambra books Pvt Ltd. The relief has come after we filed writ petition in Delhi high court in the case of M/s Pitambra books Pvt ltd where Hon’ble High court held that Circulars can supplant but not supplement the law. Circulars may mitigate harshness given in law and can grant reliefs beyond what is given in relevant statute. However, Government is not empowered to withdraw any benefits or impose any stricter conditions which is not given in law itself.
Apart from above relief, clarification on some important points have also been provided by the department through GST Circular No. 135/05/2020 – GST dated 31st March 2020 such as:
- Denial of refund of ITC accumulated on account of reduction of GST rate,
- Changes in the manner of refund in cases other than zero-rated supply or deemed export
- An additional requirement of giving details of HSN/SAC code in Annexure-2A
- No refund of invoices not appearing in GSTR-2A
1. Clubbing of GST refund claims across Financial Years is allowed
Issue:
- In both circulars, the restriction was present on clubbing of tax period across financial years for claiming a refund. However, clubbing of tax periods in the same financial years was possible.
- In the matter challenged before Hon’ble High Court of Delhi in case of our client M/s Pitambra Books Pvt Ltd., Hon’ble High court held that Circulars could supplant but not supplement the law. Circulars may mitigate harshness given in law and can grant reliefs beyond what is given in relevant statute. However, the Government has not got the empowerment to withdraw any benefits or impose any stricter conditions, which is not part of the law itself.
- Accordingly, Hon’ble HC held that restriction on clubbing of tax periods across financial years is completely arbitrary and needs to be set aside. Accordingly, Hon’ble HC directed the Government to either open the online portal to enable the petitioner to file the tax refund electronically or accept the same manually within 4 weeks from the order.
- Similarly, the issue is also faced by merchant exporters as they receive the supplies of goods in the last quarter of a Financial Year and exported such goods in the next Financial Year, i.e. from April onwards. Therefore, the restriction imposed by circular prohibits the refund of ITC accrued in such cases as well.
Clarification:
- Department has clarified that in Section 16 of IGST Act, 2017 and Section 54 of CGST Act, 2017 no bars is given for clubbing of different tax periods across Financial Years.
- Accordingly, the department has decided to remove the restriction on clubbing of tax periods across Financial Years. Accordingly, GST Circular No. 125/44/2019-GST dated 18.11.2019 stands modified to that extent, i.e. the restriction on bunching of refund claims across financial years shall not apply.
2. No Refund of accumulated input tax credit (ITC) on account of the reduction in GST Rate
Issue about GST refund claims across two financial years:
- Section 54(3)(ii) of the Central Goods and Service Tax Act, 2017 provides for a refund of ITC accumulated on account of inverted duty structure or inverted tax structure.
- However, the Board has noticed that some of the applicants have claimed a refund of ITC accumulated due to the reduction of GST rates on the same goods under an inverted duty structure. E.g. a trader purchased good “X” attracting GST @ 18%. However, subsequently, the rate of GST on “X” reduced to 12%. In the given case, such a trader claimed a refund of ITC accumulated due to such reduction of rate under section 54(3)(ii) of the CGST Act, 2017.
Clarification on GST refund claims across two financial years:
- 当局は、2017年CGST法第54条(3)(ii)に基づく仕入税額控除（ITC）の還付について、インプット（仕入）に対する税率がアウトプット（売上）に対する税率よりも高いことに起因して控除額が累積している場合に限り、還付が可能であると明確化しました。
- しかし、本件においては、インプットとアウトプットが同一であり、異なる時点において異なる税率が適用されています。インプットまたはアウトプットに変更がないため、このような状況はCGST法第54条(3)(ii)の規定の対象外となります。
- したがって当局は、インプットとアウトプットが同一である場合、CGST法第54条(3)(ii)に基づく累積ITCの還付は適用されないと明確化しました。
3. ゼロ税率供給以外の供給に対する納税額の還付方法の変更
Issue on GST refund claims across two financial years:
- 2019年11月18日付のGSTマスター通達第125/44/2019-GST号では、還付申請が可能な12のカテゴリーが列挙されています。これらのカテゴリーには、ゼロ税率供給やみなし輸出に関連するものと、その他の状況に関連するものがあります。
- ゼロ税率供給やみなし輸出以外のカテゴリーには、以下が含まれます：
- 過払い税額の還付；
- 以下のケース：州内供給として納税したものが後に州間供給となった場合（またはその逆）の還付；
- 査定、暫定査定、不服申し立て、またはその他の命令に基づく還付；
- 「その他」の根拠または理由に基づく還付。
- 現行の運用では、納税者が上記のいずれかのカテゴリーで還付を請求する場合、たとえ納税者がITC、またはITCと現金の併用で納税していたとしても、還付金は電子現金台帳に払い戻されます。
Clarification on GST refund claims across two financial years:
- 現金での還付は、控除残高の現金化につながる可能性があります。そのため当局は、納税者がゼロ税率供給やみなし輸出以外のカテゴリーで還付を申請する場合、還付金は、当初の納税時に使用された割合に応じて、電子控除台帳または電子現金台帳のいずれかへ払い戻されると明確化しました。
- したがって、還付対象の税額が当初、電子現金台帳と電子控除台帳の両方から引き落とされて支払われていた場合、還付金は現金台帳と控除台帳の両方に払い戻されます。
- 控除台帳と現金台帳への金額の按分については、還付申請の対象期間の納税義務を履行した際に、各台帳から引き落とされた割合が適用されます。したがって、全額が控除台帳から支払われていた場合は、還付も控除台帳に対して行われます。
- 現金で還付される金額については、FORM GST RFD-06による命令書の発行をもって支払われます。同様に、控除台帳に戻すべき金額については、FORM GST PMT-03による命令書が発行され、電子控除台帳へITCとして再計上されます。
4. GSTR-2Aに反映されていない請求書に対する還付の不可
Issue on GST refund claims across two financial years:
- 2019年11月18日付のGST通達第125/44/2019-GST号の第36項では、FORM GSTR-2Aに記載されていない請求書についても、納税者はそのITCの還付を請求できると明記されています。この目的のため、納税者は当該請求書の写しをアップロードする必要があります。
- しかし、2019年10月9日付の通知第49/2019-GST号により、2017年CGST規則の規則36に新しいサブ規則(4)が追加されました。これによると、ITCはサプライヤーのGSTR-2Aに記載されているITCの110%を上限として請求可能とされています。これに伴い、GSTR-2Aに記載のない請求書については控除が認められません。
- これを受けて、申請者のFORM GSTR-2Aに反映されていない請求書に対してITCが認められるかどうかについて、多くの問い合わせが寄せられました。
Clarification on GST refund claims across two financial years:
- In this matter, the department has clarified that the refund of accumulated ITC shall be granted. But only of those invoices which are appearing in GSTR-2A of the applicant.
- Accordingly, the supplier can't claim a refund of tax he pays on those invoices which do not appear in GSTR-2A.
5. New Requirement to mention HSN/SAC in Annexure ‘B’ for GST refund applications
Issue on GST refund claims across two financial years:
- In some instances, the refund is not permissible on ITC accumulated on account of input services or capital goods. Therefore, it is important for the department to have information of such classification to process the correct amount of refund.
- However, HSN/SAC codes do not appear in GSTR-2A and therefore, it become really difficult for the departmental authority to distinguish between ITC on Inputs, input services or capital goods.
Clarification on GST refund claims across two financial years:
- Department has clarified that since it is important to have a bifurcation of ITC on inputs, input services or capital goods and same is unavailable in GSTR-2A; therefore, a column relating to HSN/SAC Code shall be added in the statement of invoices relating to inward supply as per Annexure–B of the GST circular No. 125/44/2019- GST dated 18.11.2019 so as to easily identify between the supplies of goods and services.
- Therefore, now onwards applicants need to mention HSN/SAC code which is available on the inward invoices. However, where the supplier has not to mention the HSN/SAC code on an invoice, the applicant does not need to specify the HSN/SAC code in respect of such inward supply.
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