CGST CircularsGST

Circular No. 94/2019 – Seeks to clarify certain refund related issues under GST.

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Circular​​ No.​​ 94/13/2019-GST

 

 

F.​​ No.​​ CBEC-20/16/04/2018​​ –​​ GST

Government​​ of India​​ Ministry​​ of​​ Finance​​ Department​​ of​​ Revenue

Central​​ Board​​ of​​ Indirect​​ Taxes​​ and​​ Customs​​ GST​​ Policy​​ Wing

***

 

 

 

To,

New​​ Delhi,​​ Dated the​​ 28th​​ March,​​ 2019

The​​ Principal​​ Chief​​ Commissioners​​ /​​ Chief​​ Commissioners​​ /​​ Principal​​ Commissioners​​ /​​ Commissioners​​ of​​ Central​​ Tax​​ (All)

The​​ Principal​​ Director​​ Generals​​ /​​ Director​​ Generals​​ (All)​​ Madam/Sir,

Subject: Clarifications​​ on​​ refund​​ related​​ issues​​ under​​ GST–​​ Reg.

Various​​ representations​​ have​​ been​​ received​​ seeking​​ clarifications​​ on​​ certain​​ 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​​ hereunder:

 

 

Sl.

No.

Issue

Clarification

1.

Certain​​ registered​​ persons​​ have​​ reversed,​​ through​​ return​​ in​​ FORM​​ GSTR-3B​​ filed​​ for the​​ month​​ of​​ August,​​ 2018​​ or​​ for a​​ subsequent​​ month,​​ the​​ accumulated​​ input​​ tax​​ credit​​ (ITC)​​ required​​ to​​ be​​ lapsed​​ in​​ terms​​ of​​ notification​​ ​​ No.​​ ​​ 20/2018-​​ Central​​ Tax​​ ​​ (Rate)​​ ​​ dated​​ ​​ 26.07.2018​​ read​​ with​​ circular​​ No.​​ 56/30/2018-GST​​ dated​​ 24.08.2018 ​​ (hereinafter​​ referred​​ to​​ as​​ the​​ “said​​ notification”).​​ Some​​ of​​ these​​ registered​​ persons,​​ ​​ who​​ ​​ have​​ ​​ attempted​​ to​​ claim​​ refund​​ of​​ accumulated​​ ITC​​ on​​ account​​ of​​ inverted​​ tax​​ structure​​ for​​ the​​ same​​ period​​ in​​ which​​ the​​ ITC​​ required​​ to​​ be​​ lapsed​​ in​​ terms​​ of​​ the​​ said​​ notification

a)​​ As​​ a​​ one-time​​ measure​​ to​​ resolve​​ this​​ issue,​​ refund​​ of​​ accumulated​​ ITC​​ on​​ account​​ of​​ inverted​​ tax​​ structure,​​ for​​ the​​ period(s)​​ in​​ which​​ there​​ is​​ reversal​​ of​​ the​​ ITC​​ required​​ to​​ be​​ lapsed​​ in​​ terms​​ of​​ the​​ said​​ notification,​​ is​​ to​​ be​​ claimed​​ ​​ under​​ the​​ category​​ “any​​ other”​​ instead​​ of​​ under​​ the​​ category​​ “refund​​ of​​ unutilized​​ ITC​​ on​​ account​​ of​​ accumulation​​ due​​ to​​ inverted​​ tax​​ structure”​​ in​​ FORM​​ GST​​ RFD-01A.​​ It​​ is​​ emphasized​​ that​​ this​​ application​​ for​​ refund​​ should​​ relate​​ to​​ the​​ same​​ tax​​ period​​ in​​ which​​ such​​ reversal​​ has

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Circular​​ No.​​ 94/13/2019-GST

 

 

 

has​​ been​​ reversed,​​ are​​ not​​ able​​ to​​ claim​​ refund​​ of​​ accumulated​​ ITC​​ to​​ the​​ extent​​ to​​ which​​ they​​ are​​ so​​ eligible.​​ This​​ is​​ because​​ of​​ a​​ validation​​ check​​ on​​ the​​ common​​ portal​​ which​​ prevents​​ the​​ value​​ of​​ input​​ tax​​ credit​​ in​​ Statement​​ 1A​​ of​​ FORM​​ GST​​ RFD-01Afrom​​ being​​ higher​​ than​​ the​​ amount​​ of​​ ITC​​ availed​​ in​​ FORM​​ GSTR-3B​​ of​​ the​​ relevant​​ period​​ minus​​ the​​ value​​ of​​ ITC​​ reversed​​ in​​ the​​ same​​ period.​​ This​​ results ​​​​ in​​ registered​​ persons​​ being​​ unable​​ to​​ claim​​ the​​ full​​ amount of​​ refund​​ of​​ accumulated​​ ITC​​ on​​ account​​ of​​ inverted tax​​ structure ​​​​ to​​ which​​ they​​ might​​ be​​ otherwise​​ eligible.​​ What​​ is​​ the​​ solution​​ to​​ this​​ problem?

been​​ made.

b)​​ The​​ application​​ shall​​ be​​ accompanied​​ by​​ all​​ statements,​​ declarations,​​ undertakings​​ and​​ other​​ documents​​ which​​ are​​ statutorily​​ required​​ to​​ be​​ submitted​​ with​​ a​​ “refund​​ claim​​ of​​ unutilized​​ ITC​​ on​​ account​​ of​​ accumulation​​ due​​ to​​ inverted​​ tax​​ structure”.​​ On​​ receiving​​ the​​ said​​ application,​​ the​​ proper​​ officer​​ shall​​ himself​​ calculate​​ the​​ refund​​ amount​​ admissible​​ as​​ per​​ rule​​ 89(5)​​ of​​ Central​​ Goods​​ and​​ Services​​ Tax​​ Rules,​​ 2017​​ (hereinafter​​ referred​​ to​​ as​​ “CGST​​ Rules”),​​ in​​ the​​ manner​​ detailed​​ in​​ para​​ 3​​ of​​ Circular​​ No.​​ 59/33/2018-GST​​ dated​​ 04.09.2018.​​ After​​ calculating​​ the​​ admissible​​ refund​​ amount,​​ as​​ described​​ above,​​ and​​ scrutinizing​​ the​​ application​​ for​​ completeness​​ and​​ eligibility,​​ if​​ the​​ proper​​ officer​​ is​​ satisfied​​ that​​ the​​ whole​​ or​​ any​​ part​​ of​​ the​​ amount​​ claimed​​ is​​ payable​​ as​​ refund,​​ he​​ shall​​ request​​ the​​ taxpayer,​​ in​​ writing,​​ to​​ debit​​ the​​ said​​ amount​​ from​​ his​​ electronic​​ credit​​ ledger​​ through​​ FORM​​ GST​​ DRC-03.​​ Once​​ the​​ proof​​ of​​ such​​ debit​​ is​​ received​​ by​​ the​​ proper​​ officer,​​ he​​ shall​​ proceed​​ to​​ issue​​ the​​ refund​​ order​​ in​​ FORM​​ GST​​ RFD-06​​ and​​ the​​ payment​​ advice​​ in​​ FORM​​ GST​​ RFD-05.

c)​​ All​​ refund​​ applications​​ for​​ unutilized​​ ITC​​ on​​ account​​ of​​ accumulation​​ due​​ to​​ inverted​​ tax​​ structure​​ for​​ subsequent​​ tax​​ period(s)​​ shall​​ be​​ filed​​ in​​ FORM​​ GST​​ RFD-01A​​ under​​ the​​ category​​ “refund​​ of​​ unutilized​​ ITC​​ on​​ account​​ of​​ accumulation​​ due​​ to​​ inverted​​ tax​​ structure”.

2.

The​​ clarification​​ at​​ Sl.​​ No.​​ 1​​ above​​ applies​​ to​​ ​​ registered​​ ​​ persons​​ ​​ who​​ ​​ have​​ ​​ already

It ​​​​ ​​ is ​​ ​​ hereby ​​ ​​ clarified ​​​​ ​​ that ​​ ​​ all ​​​​ ​​ those​​ registered​​ persons​​ required​​ to​​ make​​ the

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reversed​​ the​​ ITC​​ required​​ to​​ be​​ lapsed​​ in​​ terms​​ of​​ the​​ said​​ ​​ notification​​ ​​ through​​ return​​ in​​ FORM​​ GSTR-3B.​​ What​​ about​​ those​​ registered​​ persons​​ who​​ are​​ yet​​ to​​ perform​​ this​​ reversal?

reversal​​ in​​ terms​​ of​​ the​​ said​​ notification​​ and​​ who​​ have​​ not​​ yet​​ done​​ so,​​ may​​ reverse​​ the​​ said​​ amount​​ through​​ FORM​​ GST​​ DRC-03​​ instead​​ of​​ through​​ FORM​​ GSTR-3B.

3.

What​​ shall​​ be​​ the​​ consequence​​ if​​ any​​ registered​​ person​​ reverses​​ the​​ amount​​ of​​ credit​​ to​​ be​​ lapsed,​​ in​​ terms​​ the​​ said​​ notification,​​ through​​ the​​ return​​ in​​ FORM​​ GSTR-3B​​ for​​ any​​ month​​ subsequent​​ to​​ August,​​ 2018​​ or​​ through​​ FORM​​ GST​​ DRC-03​​ subsequent​​ to​​ the​​ due​​ date​​ of​​ filing​​ of​​ the​​ return​​ in​​ FORM​​ GSTR-3B​​ for​​ the month of​​ August,​​ 2018?

  • As​​ the​​ registered​​ person​​ has​​ reversed​​ the​​ amount​​ of​​ credit​​ to​​ be​​ lapsed​​ in​​ the​​ return​​ in​​ FORM​​ GSTR-3B​​ for​​ a​​ month​​ subsequent​​ to​​ the​​ month​​ of​​ August,​​ 2018​​ or​​ through​​ FORM​​ GST​​ DRC-03​​ subsequent​​ to​​ the​​ due​​ date​​ of​​ filing​​ of​​ the​​ return​​ in​​ FORM​​ GSTR-3B​​ for​​ the​​ month​​ of​​ August,​​ 2018,​​ he​​ shall​​ be​​ liable​​ to​​ pay​​ interest​​ under​​ sub-section​​ (1)​​ of​​ section​​ 50​​ of​​ the​​ CGST​​ Act​​ on​​ the​​ amount​​ which​​ has​​ been​​ reversed​​ belatedly.​​ Such​​ interest​​ shall​​ be​​ calculated​​ starting​​ from​​ the​​ due​​ date​​ of​​ filing​​ of​​ return​​ in​​ FORM​​ GSTR-​​ 3B​​ for​​ the​​ month​​ of​​ August,​​ 2018​​ till​​ the​​ date​​ of​​ reversal​​ of​​ said​​ amount​​ through​​ FORM​​ GSTR-3B​​ or​​ through​​ FORM​​ GST​​ DRC-03,​​ as​​ the​​ case​​ may​​ be.

  • The​​ registered​​ person​​ who​​ has​​ reversed​​ the​​ amount​​ of​​ credit​​ to​​ be​​ lapsed​​ in​​ the​​ return​​ in​​ FORM​​ GSTR-3B​​ for​​ any​​ month​​ subsequent​​ to​​ August,​​ 2018​​ or​​ through​​ FORM​​ GST​​ DRC-03​​ subsequent​​ to​​ the​​ due​​ date​​ of​​ filing​​ of​​ the​​ return​​ in​​ FORM​​ GSTR-3B​​ for​​ the​​ month​​ of​​ August,​​ 2018​​ would​​ remain​​ eligible​​ to​​ claim​​ refund​​ of​​ unutilized​​ ITC​​ on​​ account​​ of​​ accumulation​​ due​​ to​​ inverted​​ tax​​ structure​​ w.e.f.​​ 01.08.2018.​​ However,​​ such​​ refund​​ shall​​ be​​ granted​​ only​​ after​​ the​​ reversal​​ of​​ the​​ amount​​ of​​ credit​​ to​​ be​​ lapsed,​​ either​​ through​​ FORM​​ GSTR-3B​​ or​​ FORM​​ GST​​ DRC-03,​​ along​​ with​​ payment​​ of​​ interest,​​ as​​ applicable.

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4.

How​​ should​​ a​​ merchant​​ exporter​​ claim​​ refund​​ of​​ input​​ tax​​ credit​​ availed​​ on​​ supplies​​ received​​ on​​ which​​ the​​ supplier​​ has​​ availed​​ the​​ benefit​​ of​​ the​​ Government​​ of​​ India,​​ Ministry​​ of​​ Finance,​​ notification​​ No.​​ 40/2017-Central​​ Tax​​ (Rate),​​ dated​​ the​​ 23rd​​ October,​​ 2017,​​ published​​ in​​ the​​ Gazette​​ of​​ India,​​ Extraordinary,​​ Part​​ II,​​ Section​​ 3,​​ Sub-section​​ (i),​​ vide​​ number​​ G.S.R​​ 1320​​ (E),​​ dated​​ the​​ 23rd​​ October,​​ 2017​​ or​​ notification​​ No.​​ 41/2017-Integrated​​ Tax​​ (Rate),​​ dated​​ the​​ 23rd​​ October,​​ 2017,​​ published​​ in​​ the​​ Gazette​​ of​​ India,​​ Extraordinary,​​ Part​​ II,​​ Section​​ 3,​​ Sub-​​ section​​ (i),​​ vide​​ number​​ G.S.R​​ 1321(E),​​ dated​​ the​​ 23rd​​ October,​​ 2017​​ (hereinafter​​ referred​​ to​​ as​​ the​​ “said​​ notifications”)?

a)​​ Rule​​ 89(4B)​​ of​​ the​​ CGST​​ Rules​​ provides​​ that​​ where​​ the​​ person​​ claiming​​ refund​​ of​​ unutilized​​ input​​ tax​​ credit​​ on​​ account​​ of​​ zero-rated​​ supplies​​ without​​ payment​​ of​​ tax​​ has​​ received​​ supplies​​ on​​ which​​ the​​ supplier​​ has​​ availed​​ the​​ benefit​​ of​​ the​​ said​​ notifications,​​ the​​ refund​​ of​​ input​​ tax​​ credit,​​ availed​​ in​​ respect​​ of​​ such​​ inputs​​ received​​ under​​ the​​ said​​ notifications​​ for​​ export​​ of​​ goods,​​ shall​​ be​​ granted.

b)​​ This​​ refund​​ of​​ ​​ accumulated​​ ​​ ITC​​ under​​ rule​​ 89(4B)​​ of​​ ​​ the​​ ​​ CGST​​ Rules​​ shall​​ be​​ applied​​ under​​ the​​ category​​ “any​​ other”​​ instead​​ of​​ under​​ the​​ category​​ “refund​​ of​​ unutilized​​ ITC​​ on​​ account​​ of​​ exports​​ without​​ payment​​ of​​ tax”​​ in​​ FORM​​ GST​​ RFD-01A​​ and​​ shall​​ be​​ accompanied​​ by​​ ​​ all​​ ​​ supporting​​ ​​ documents​​ required​​ ​​ for​​ ​​ substantiating​​ ​​ the​​ refund​​ claim​​ under​​ the​​ category​​ “refund​​ of​​ unutilized​​ ITC​​ on​​ account​​ of​​ exports​​ without​​ payment​​ of​​ tax”.​​ After​​ scrutinizing​​ the​​ application​​ for​​ completeness​​ and​​ eligibility,​​ if​​ the​​ proper​​ officer​​ is​​ satisfied​​ that​​ the​​ whole​​ or​​ any​​ part​​ of​​ the​​ amount​​ claimed​​ is​​ payable​​ as​​ refund,​​ he​​ shall​​ request​​ the​​ taxpayer,​​ in​​ writing,​​ to​​ debit​​ the​​ said​​ amount​​ from​​ his​​ electronic​​ credit​​ ledger​​ through​​ FORM​​ GST​​ DRC-03.​​ Once​​ the​​ proof​​ of​​ such​​ debit​​ is​​ received​​ by​​ the​​ proper​​ officer,​​ he​​ shall​​ proceed​​ to​​ issue​​ the​​ refund​​ order​​ in​​ FORM​​ GST​​ RFD-06​​ and​​ the​​ payment​​ advice​​ in​​ FORM​​ GST​​ RFD-05.

5.

Vide​​ Circular​​ No.​​ 59/33/2018-GST​​ dated

In​​ ​​ such​​ ​​ cases,​​ ​​ the​​ ​​ claimant​​ ​​ may​​ ​​ re-

04.09.2018, ​​ ​​ it ​​ ​​ was ​​​​ ​​ clarified ​​​​ ​​ that ​​ ​​ after

submit​​ the​​ refund​​ application​​ manually

issuance​​ of​​ a​​ deficiency​​ memo,​​ the​​ input

inFORM GSTRFD-01Aafter

tax​​ ​​ credit​​ ​​ is​​ ​​ required​​ ​​ to​​ ​​ be​​ ​​ re-credited

correction​​ of​​ deficiencies​​ pointed​​ out​​ in

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through​​ FORM​​ GST​​ RFD-01B​​ and​​ the​​ taxpayer​​ is​​ expected​​ to​​ file​​ a​​ fresh​​ application​​ for​​ refund.​​ Accordingly,​​ in​​ several​​ cases,​​ the​​ ITC​​ amounts​​ were​​ re-​​ credited​​ after​​ issuance​​ of​​ deficiency​​ memo.​​ However,​​ it​​ was​​ later​​ represented​​ that​​ the​​ common​​ portal​​ does​​ not​​ allow​​ a​​ taxpayer​​ to​​ file​​ a​​ fresh​​ application​​ for​​ the​​ same​​ period​​ after​​ issuance​​ of​​ a​​ deficiency​​ memo.​​ Therefore,​​ the​​ matter​​ was​​ re-​​ examined​​ and​​ it​​ was​​ subsequently​​ clarified,​​ vide​​ Circular​​ No.​​ 70/44/2018-​​ GST​​ dated​​ 26.10.2018​​ that​​ no​​ re-credit​​ should​​ be​​ carried​​ out​​ in​​ such​​ cases​​ and​​ taxpayers​​ should​​ file​​ the​​ rectified​​ application,​​ after​​ issuance​​ of​​ the​​ deficiency​​ memo,​​ under​​ the​​ earlier​​ ARN​​ only.​​ It​​ was​​ also​​ further​​ clarified​​ that​​ a​​ suitable​​ clarification​​ would​​ be​​ issued​​ separately​​ for​​ cases​​ in​​ which​​ such​​ re-credit​​ has​​ already​​ been​​ carried​​ out.​​ However,​​ no​​ such​​ clarification​​ has​​ yet​​ been​​ issued​​ and​​ several​​ refund​​ claims​​ are​​ pending​​ on​​ this​​ account.

the​​ deficiency​​ memo,​​ using​​ the​​ same​​ ARN.​​ The​​ proper​​ officer​​ shall​​ then​​ proceed​​ to​​ process​​ the​​ refund​​ application​​ as​​ per​​ the​​ existing​​ guidelines.​​ After​​ scrutinizing​​ the​​ application​​ for​​ completeness​​ and​​ eligibility,​​ if​​ the​​ proper​​ officer​​ is​​ satisfied​​ that​​ the​​ whole​​ or​​ any​​ part​​ of​​ the​​ amount​​ claimed​​ is​​ payable​​ as​​ refund,​​ he​​ shall​​ request​​ the​​ taxpayer,​​ in​​ writing,​​ to​​ debit​​ the​​ said​​ amount​​ from​​ his​​ electronic​​ credit​​ ledger​​ through​​ FORM​​ GST​​ DRC-03.​​ Once​​ the​​ proof​​ of​​ such​​ debit​​ is​​ received​​ by​​ the​​ officer,​​ he​​ shall​​ proceed​​ to​​ issue​​ the​​ refund​​ order​​ in​​ FORM​​ GST​​ RFD-06​​ and​​ the​​ payment​​ advice​​ in​​ FORM​​ GST​​ RFD-05.

 

  • It​​ is​​ requested​​ that​​ suitable​​ trade​​ notices​​ may​​ be​​ issued​​ to​​ publicize​​ the​​ contents​​ of​​ this​​ Circular.

 

  • Difficulty,​​ if​​ any,​​ in​​ implementation​​ of​​ this​​ Circular​​ may​​ please​​ be​​ brought​​ to the​​ notice​​ of the​​ Board.​​ Hindi​​ version​​ would follow.

 

 

 

*****

(Upender​​ Gupta)​​ Principal​​ Commissioner​​ (GST)

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