Recently CBIC has released a clarification on how merchant exporter can claim Refund of accumulated ITC to Merchant Exporter where supplies have been made by him taking benefits to vide notification no. 40/2017-Central Tax (Rate), Dated: October 23, 2017 & Notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017
1. GST on supplies by Merchant Exporter
Central Board of Indirect Taxes (“CBIC” or “Department”) has exempted supplies to merchant exporters from Goods and Service Tax (“GST”) leviable in excess of 0.10% vide notification no. 40/2017-Central Tax (Rate), Dated: October 23, 2017 & Notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017 subject to certain conditions.
Condition for merchant exporter on order to availed lower GST on merchant export under Refund of accumulated ITC to Merchant Exporter:
- Registered Supplier shall supply the goods to the Recipient on a tax invoice.
- Recipient shall export the said goods within a period of 90 days from the date of issue of a tax invoice by the Supplier.
- Recipient shall indicate the GSTIN of the Supplier and the tax invoice number issued by the Supplier in respect of the said goods in the shipping bill or bill of export i.e Merchant exporter details should come in shipping bill.
- Recipient shall be registered with an Export Promotion Council or a Commodity Board recognized by the Department of Commerce.
- Recipient shall place an order on Supplier for procuring goods at concessional rate and a copy of the same shall also be provided to the jurisdictional tax officer of the Supplier.
- When goods have been exported, the Recipient shall provide copy of shipping bill or bill of export containing details of Goods and Services Tax Identification Number (GSTIN) and tax invoice of the Supplier along with proof of export general manifest or export report having been filed to the Supplier as well as jurisdictional tax officer of such supplier.
- Further, the Supplier shall not be eligible for the above-mentioned exemption if the registered recipient fails to export the said goods within a period of 90 days from the date of issue of tax invoice.
2. Refund of Accumulated ITC to Merchant Exporter
However, the merchant exporter was unable to file an application for a refund in the form GST RFD-01A for a Refund of accumulated ITC to Merchant Exporter on his procurement due to a technical glitch. For this purpose department issued clarification vide circular no. 94/13/2019-GST, Dated: March 28, 2019, wherein clarification is provided on the following issues:
3. Under which category refund application should be filed by merchant exporter in form GST RFD-01A?
Rule 89(4B) of Central Goods and Service Tax Rules, 2017 (“CGST Rules, 2017) specifies that merchant exporter is entitled to claim refund of ITC accumulated on procurement from those suppliers who have taken benefit of notification no. 40/2017-Central Taxes (Rate) & Notification No. 41/2017-Integrated Taxes (Rate). Relevant extract of rule is as follows:
89. Application for refund of tax, interest, penalty, fees or any other amount
(4B) Where the person claiming refund of unutilised input tax credit on account of zero rated supplies without payment of tax has –
(a) received supplies 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; or
(b) availed the benefit of notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299(E), dated the 13th October, 2017,
the refund of input tax credit, availed in respect of inputs received under the said notifications for export of goods and the input tax credit availed in respect of other inputs or input services to the extent used in making such export of goods, shall be granted.] 97] 98]
Merchant exporter should file refund application under catergory of “Any other” instead of “refund of unutilized ITC on account of exports without payment of tax”.
4. What is the further procedure of granting refund to merchant exporter?
Merchant exporter is required to file refund application alongwith all supporting documents required for substantiating refund amount.
After scrutinizing all submitted document and filed application, proper officer will determine amount of refund due to applicant. However, before granting refund, proper officer will request applicant to reverse such amount in his electronic credit ledger through filing of GST DRC-03.
Upon submission of proof of reversal, proper officer will issue refund order in form GST RFD-06.