Under the Goods and Service Tax (GST), the Refund is a key component in the case of export of goods or services. The following two mechanisms of claiming a refund in case of export are:
- Claiming refund of Input Tax Credit about goods exported without payment of IGST;
- Claiming refund of IGST paid on export of goods
CBIC has received various representations from the industry seeking clarification on how to claim a refund where goods were exported on payment of IGST and additional IGST is paid post export on account of upward revision of price. As per representation, prices of goods exported are revised, after export, due to various reasons such as price linking to some international index. In such cases, the exporter is required to pay IGST on such price revision along with interest. However, there is no mechanism provided for claiming a refund of such additional IGST payment.
Therefore, CBIC has clarified the manner of claiming a refund vide circular No. 226/20/2024-GST dated 11th July 2024. Following is the clarification issued:
1. Process of filing refund for additional IGST paid on account of upward revision of price.
- A refund of IGST paid on the export of goods is processed by the proper officer of Customs in an automated manner without any manual intervention.
- However, there is no process specified for claiming a refund of IGST paid on account of the upward revision of price post-export.
- Therefore, CBIC has clarified that the exporter can apply for claiming refund of such IGST by filing FORM GST RFD-01 electronically on the common portal.
- Such an application shall be processed by the jurisdictional GST officer by Rule 89 of CGST Rules.
2. Category under which refund application is to be filed
- GSTN is the process of developing a separate category in Form GST RFD-04 for filing refund applications in such cases.
- However, till the time such a separate category is made life on the GST portal, the exporter may file a refund application under the category “Any other” with the remarks “Refund of additional IGST paid on account of increase in price after export of goods”.
- Refund applications shall be filed with relevant documents as prescribed in Rule 89 of CGST Rules.
- Such application shall be processed based on the documentary proof submitted by the refund applicant. Further, the validated details of shipping bills, GST involved in such shipping bills, and corresponding IGST refund sanctioned will also be made available to jurisdictional GST officers to enable them to process such refund claims of additional IGST.
3. Minimum Refund Amount:
- As per Section 54(14) of the CGST Act, no refund shall be granted if the amount is less than INR 1,000. Therefore, no such refund shall be paid if the amount claimed is less than INR 1,000.
4. Time limit for filing refund:
- As per Rule 89(1B) of CGST Rules (Inserted vide Notification No. 12/2024-CT dated 10.07.2024), an application for refund of additional IGST paid can be filed before the expiry of 2 years from the relevant date.
- However, in the case where the relevant date is before the date on which Rule 89(1B) of CGST Rules is made effective, such refund application shall be filed within 2 years from the date on which such rule has come into force.
5. Documents to be filed along with refund application
The following documents are required to be accompanied by the refund application:
- Copy of shipping bill or bill of exports;
- Copy of original invoices;
- Copy of contract/ other document(s), as applicable, indicating requirement for the revision in price of such goods after exports;
- Copy of the original invoices as well as relevant debit note(s)/ supplementary invoices;
- Proof of payment of additional IGST and applicable interest/
- Details of the relevant FORM GSTR-1/ FORM GSTR-3B furnished by the applicant in which the document of price revision was declared and corresponding tax payment was made;
- Proof of receipt of remittance of additional foreign exchange (FIRC) issued by Authorised Dealer-I banks;
- A certificate of a practicing chartered accountant or a cost accountant certifying therein that the said additional foreign exchange remittance is on account of such upward revision in price of the goods after export;
- Statement 9A of FORM GST RFD 01; and
- Statement 9B of FORM GST RFD 01.
6. Action to be taken by the proper officer
While processing the refund application, the proper officer shall verify that:
- The exporter has reported the export Invoice and corresponding debit note in GSTR-1 and has paid an additional amount of IGST and interest in FORM GSTR-3B.
- The value declared in GSTR-1 and corresponding foreign exchange received.
- The application shall be scrutinized for its completeness. Where the proper officer is satisfied that the whole or any part of the amount claimed is payable as a refund, he shall proceed to issue the refund.
- The refund shall be sanctioned in sanction order FORM GST RFD-06 and the payment order in FORM GST RFD-05.
- Further, a detailed speaking order shall also be uploaded along with the refund sanction order.
7. Action to be taken in case of downward Revision of Price
- In case of a downward revision of price after the export of goods, the supplier is required to deposit the refund of the IGST received in proportion to the reduction in the price of goods exported along with applicable interest.
- The proper officer, while granting the refund in case of an upward revision of price, shall also verify whether the exporter has deposited the excess refund amount in the cases where there is a downward revision in the price of goods after exports, during the relevant tax period, if any.
8. Conclusion:
IGST paid on account of upward revision of price post-export is a common situation faced by the industry. This clarification has resolved the issue of unnecessary funds holding due to IGST paid on such an upward revision. For earlier cases, the time limit is granted of 2 years from the date the corresponding notification is issued. The exporter must ensure that the application is filed with all specified documents.
