CBIC received various issues related to GST refunds such refund should be granted in accordance with invoices appearing in GSTR-2A or GSTR-2B, whether exporter is entitled to claim refund of IGST paid under Rule 96A(1), manner of computation of adjusted total turnover etc.
In order to clarify these issues and to bring uniformity, CBIC has provided followin gclarification on various matters vide Circular No. 197/09/2023- GST dated 17th July, 2023.
a. Admissibility of refund on basis of GSTR-2B
- As per Circular No. 135/05/2020-GST dated 31st March, 2020, refund of accumulated input tax credit under Section 54(3) is restricted to those invoices which are uploaded by the supplier in FORM GSTR-1 and reflecting FORM GSTR-2A of the recipient.
- However, with effect from 01.01.2022, taxpayers are entitled to claim ITC of those invoices which are appearing in GSTR-2B.
- Therefore, doubts were raised that refund under Section 54(3) of CGST Act should be granted on the basis of ITC appearing in GSTR-2A or ITC appearing in GSTR-2B.
- CBIC has clarified that since the ITC is availed on the basis of GSTR-2B with effect from 01.01.2022, accordingly, refund for a tax period shall be restricted to ITC of invoices reflected in FORM GSTR-2B of the applicant for such tax period or for any of the previous tax periods.
- Further, since ITC based on GSTR-2B has been brought into effect from 01.01.2022, therefore, restriction of the admissibility of refund of ITC appearing in GSTR-2B shall apply for refund claims of tax period of January 2022 onwards.
- However, in cases where refund claims for a tax period from January 2022 onwards has already been disposed of by the proper officer before the issuance of this circular and such disposal is made in accordance with guidelines in force, the same shall not be reopened because of the clarification being issued by this circular.
b. Undertaking while filing refund application
- While filing refund application in Form GST RFD-01, the applicant is required to provide an undertaking that in case of non-compliance of provisions of Section 16(2)(c) and Section 42(2) of CGST Act, refund granted shall be returned alongwith applicable interest.
- However, now refund of ITC is admissible on the basis of GSTR-2B and also, Section 42 has been deleted.
- CBIC has clarified that since provisions of Section 42 has been deleted and provisions of Section 41 has been amended wherein the concept of provisionally accepted input tax credit has been done away.
- Therefore, undertaking is no more required to give for Section 42. Consequently, taxpayers are required to give undertaking under Section 16(2)(c) of CGST Act only.
c. Computation of Adjusted total Turnover
- A new Explanation has been inserted to Rule 89(4) of CGST Rules to clarify that value of goods exported out of India shall be lower of following value:
- Therefore, doubts have been raised regarding calculation of “adjusted total turnover” under Rule 89(4) of CGST Rules. Clarification is required that while computing adjusted total turnover, whether the value of goods exported out of India has to be considered as per Explanation given.
- CBIC has clarified that consequent to amendment in definition of the “Turnover of zero-rated supply of goods”, Circular 147/03/2021-GST dated 12.03.2021 was issued which clarified that the same value of zero-rated supply of goods, as calculated in explanation, needs to be taken into consideration while calculating “turnover in a state or a union territory”.
- Therefore, the value of goods exported out of India to be included while calculating “adjusted total turnover” will be same as being determined according to the explanation.
d. Clarification with respect to admissibility of refund after complying provisions of Rule 96A(1)
- In various instances, exporters made voluntary payment of IGST alongwith interest where goods could not be exported or payment could not be received for services within a given time period.
- Therefore, clarification is required whether subsequent to export of such goods or on realization of payment for export of services, whether the exporters are entitled to claim refund of:
- unutilized input tax credit on account of export;
- Refund of the integrated tax; and
- Refund of interest paid with IGST
- As per Rule 96A(1) of CGST Rules, for the purpose of export without payment of IGST, a registered person is required to furnish a bond or a Letter of Undertaking (LUT) prior to export that he shall make payment of taxes alongwith interest within:
- 15 days after the expiry of 3 months from the date of issue of the invoice for export, if the goods are not exported out of India; or
- 15 days after the expiry of 1 year from the date of issue of the invoice for export, if the payment of such services is not received in convertible foreign exchange or in Indian rupees, wherever permitted by the RBI.
- For this purpose, it was clarified vide Circular No. 125/44/2019-GST dated 18.11.2019 that:
- As long as goods are actually exported, even after a period of 3 months, payment of IGST first and claiming refund after should not be insisted upon.
- In such cases, the jurisdictional Commissioner may grant extension of time limit for export on post facto basis.
- The same principle should be followed in case of export of services.
- Further, in the same circular, it was emphasized that the substantive benefits of zero rated may not be denied where it has been established that exports in terms of the relevant provisions have been made.
- Therefore, this clarifications imply that as long as goods are actually exported or payment is realized in case of export of services, even beyond the given time limit, the benefit of zero-rated supplies cannot be denied to the concerned exporters.
- Accordingly, CBIC has clarified that, on actual export of the goods or on realisation of payment for export of services, the exporters would be entitled to claim refund of unutilized ITC in terms section 54(3) of the CGST Act, if otherwise admissible.
- Further, in such cases subsequent to export of the goods or realization of payment in case of export of services, the such exporters would be entitled to claim refund of the IGST paid earlier. However, no refund of the interest paid shall be admissible.
- Further, in such case, the refund application can be made under the category “Excess payment of tax”. However, till the time such facility is not available on the portal, the applicant may file the refund application under the category “Any Other” on the portal.