Updated GST refund filing and claims process

GST refund filing and claims process


In order to facilitate a smooth flow of GST refund filing and claims process, the Central Board of Indirect Taxes and Customs (‘CBIC’) has strived to implement a hassle-free refund process at every stage.

In line with this objective, the GST Council, in its 31st meeting held on 22 December 2018 has rationalised and introduced several taxpayer friendly measures in the GST refund filing and claims process.

In addition, several clarifications on procedural aspects of refund claims, jurisdiction, inverted duty structure, compensation claims, Input Tax Credits etc. have been issued which would bring in practical clarity on the process to be adopted by the GST officers.

In this context, the CBIC has issued a Circular No. 79/53/2018-GST dated 31 December 2018 on the subject. The summary of the Circular is given below for ease of reference:

1. Electronic refund filing process introduced – Now say Good-Bye to physical refund claims

1.1 Existing physical filing process

As per the current process for filing refund claims, taxpayers were required to undertake the following actions in sequence:

  1. File FORM GST RFD – 01A on the GST portal
  2. Generate Application Reference Number (ARN)
  3. Take print-outs of the application along with all the supporting documents
  4. Submit the application along with all the supporting documents physically in the office of the jurisdictional GST officer.

1.2 Electronic Refund filing process

In order to simplify the process, CBIC has prescribed the following revised process:

  1. File FORM GST RFD – 01A on the GST portal
  2. Upload all documents/ undertaking/ statements along with the refund claim in Form GST RFD – 01A
  3. In accordance with the provisions of Circular No. 59/33/2018-GST dated 4 September 2018, the following documents may be submitted electronically along with Form GST RFD – 01:
    • a statement of invoices in a prescribed format instead of providing copies of all invoices
    • copies of only those invoices which are not found in FORM GSTR-2A may to be submitted
  4. Generate Application Reference Number (ARN)
  5. No requirement to print either the refund application or the supporting documents
  6. No requirement to physically submit the documents in the office of the jurisdictional GST officer

1.3 Manual refund filing at the option of taxpayer

However, the taxpayer will still have the option to physically submit the refund application to the jurisdictional proper officer in FORM GST RFD-01A, along with supporting documents, if he so chooses.

1.4 Process after filing the refund application

As soon as the ARN is generated, the refund application along with all the supporting documents shall be transferred electronically to the jurisdictional GST officer

The jurisdictional GST Officer would be able to view the application on the system.

The date of filing the refund application shall be considered to be the date of generation of the ARN

The acknowledgement for the complete application or deficiency memo, as applicable, would be issued by the jurisdictional GST officer based on the documents so received electronically from the common portal.

An acknowledgement shall be issued within a period of 15 days from the date of ARN. The acknowledgement/ deficiency memo shall be issued manually for the time being.

1.5 Where the jurisdiction is not allocated to either Central or State GST authorities

Where the jurisdiction of a taxpayer remains unallocated to either the Central or State Tax Authority, the refund application has to be submitted physically before the jurisdictional GST officer of either the State or the Central tax authority, at the option of the taxpayer.

1.6 Refund applications assigned to wrong jurisdictional GST officer

In relation to the transfer of refund applications assigned to the wrong jurisdictional GST officer, the CBIC has clarified as under:

Where a refund application is electronically transferred to the wrong jurisdictional officer, such officer shall re-assign it to the correct jurisdictional officer electronically within a period of three days.

In such cases, the date of filing the refund application shall be counted only after the same is reassigned.

In such cases, a deficiency memo shall not be issued to taxpayers merely because the applications were received electronically in the wrong jurisdiction.

Where the facility of electronic re-assignment is not available, the present arrangement of manual reassignment shall continue.

1.7 Physical filing process to be followed for all rectified applications filed pursuant to a deficiency memo

Where a deficiency memo has been issued in relation to a refund claim, taxpayers would be required to submit the rectified refund application under the earlier ARN only.

The CBIC has clarified as under:

  • The rectified application has to treated as a fresh refund application
  • The rectified application along with the supporting documents is required to be submitted manually in the office of the jurisdictional GST officer.

2. Interest @ 6% on non-disbursal of refunds within 60 days

The CBIC has advised all the GST authorities to issue the final sanction orders in FORM GST RFD – 06 within a period of 45 days of the date of receipt of ARN so that the disbursement of refund is completed within 60 days by both Central and State Tax authorities.

Where any tax ordered to be refunded is not refunded within 60 days of the date of ARN, , interest at the rate of 6 % per anum on the refund amount starting from the due date for disbursal of refund till the date of actual refund shall be payable by the GST authorities to the taxpayer.

3. Way forward for refund applications generated on the portal but not physically submitted

The CBIC has clarified the way forward as under:

3.1 Amount of refund is less than INR 1,000

Refund applications to be rejected and the amount re-credited to the electronic credit ledger of the taxpayer through the issuance of FORM GST RFD-01B.

3.2 Where the amount of refund is more than INR 1,000

Where an application has not been received by the jurisdictional GST officer within 60 days from the date of ARN, an email may be sent to the applicant to re-submit the application within 15 days of the date of the email.

The contact details and the address of the jurisdictional officer may also be provided in the said communication

Where the taxpayer fails to physically submit the application even after the communication through email, the refund application shall be summarily rejected and any balance shall be re-credited to the electronic credit ledger.

3.3 Where there is excess balance in the electronic cash ledger resulting in refund

  • The amount already debited in the electronic cash ledger may be re-credited.
  • Such refund will be process through FORM GST RFD – 01B, if there are no liabilities in the electronic liability register.
  • Such refund will be processed even though no GSTR-3B has been filled.

4. ITC pertaining to invoices of earlier tax periods availed in subsequent tax period eligible for refund

It has come to the notice of the CBIC that the GST officers are excluding the invoices issued by the suppliers in previous month but ITC availed in the current tax period and filed in the GSTR – 3B.

The CBIC has clarified as under:

GST law mandates that ITC can be availed only after the goods are received

Where the supplier raises an invoice (ex: August 2017) and the goods reach the buyer’s premises in the next month (ex: September 2017), the Buyer can avail the ITC on such goods in the Form GSTR – 3B for the next month only (Ex: September 2017).

Thus, refund claim filed for the relevant period is for the amount of Net ITC availed and not restricted only to the purchases made during the period.

Further, Section 16(4) also allows the registered person to claim ITC on or before the due date of filing of return for the month of September following the Financial year to which the invoice pertains or the date of filing of Annual Return, whichever is earlier.

Hence, credit availed in the purchases in the subsequent months should not be denied.

5. ITC eligible on inputs not directly consumed in manufacturing process

The CBIC has clarified and reiterated that the scope of the term ‘inputs’ is very wide and covers any goods other than capital goods used or intended to be used by a supplier in the course or furtherance of business.

There are no restrictions on the manner of use of inputs for making an outward supplies as long as the same are used/ intended to be used in the course or furtherance of business.

Hence, ITC should not be denied on the inputs which are not directly consumed in the manufacturing process (like Stores and spares, Packing materials, Machinery repairs, Printing and station

6. Whether the ITC reversed has to be taken into consideration for calculating the amount of “Net ITC” under Rule 89?

The CBIC has clarified that the amount of ITC reversed shall not be considered as ITC availed. Hence, the same should not be included while calculating the amount of Net ITC.

However the same can be consider for refund if the same is reavailed subject to the restriction under section 16(4) of the CGST Act,

Check certain clarification in Refund related issues

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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