REFUND OF UN UTILISED INPUT TAX CREDIT (ITC) ON ACCOUNT OF EXPORT UNDER LUT – RULE 89 (4) :

1. The definition of “Adjusted Total Turnover” under Rule 89(4) (E) has be substituted to  read as:

‘(E) “Adjusted Total Turnover” means the sum total of the value of
(a) the turnover in a State or a Union territory, as defined under clause (112) of
(b) the turnover of zero-rated supply of services determined in terms of clause

(D) above and non-zero-rated supply of services , excluding
(i) the value of exempt supplies other than zero – rated supplies ; and
(ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any, during the relevant period.

2. As per Circular 37/11/2018 Dt. 15.03.2018 it was necessary to submit Invoices for of  Inputs, Input services and Capital goods for refund of ITC on account of Exports. As it was leading to increase in difficulties and compliance cost for exporters. Making the process of refund of ITC on account of Exports of Goods or services without payment of IGST or Export of Services with payment of IGST exporter friendly, the ITC Refund Claim application will now be accompanied by a Print-out of FORM GSTR 2A of the claimant for the relevant period for which the refund is claimed.

The proper officer shall rely upon FORM GSTR-2A as an evidence of the accountal of the supply by the corresponding supplier in relation to which the input tax credit has been availed by the claimant.

It may be noted that there may be  situations in which FORM GSTR-2A may not contain the details of all the invoices
relating to the input tax credit availed,possibly because the supplier’s FORM GSTR-1 was delayed or not filed. In such situations, the proper officer may call for the hard copies of such invoices if he deems it necessary for the examination of  the claim for refund.

It is emphasized that the proper officer shall not insist on the submission of an  invoice (either original or duplicate) the details of which are present in FORM GSTR-2A of the relevant period submitted by the claimant.

The exporter shall also submit the details of Invoices (Purchase Invoices) on which the  ITC refund is being claimed during the relevant period in a format enclosed to the circular marked as Annexure – A {Copy Attached} including mentioning it’s eligibility if ITC.

3. The circular clarifies that the system of refund (RFD01A) calculates ITC amount considering least of the three :

a) The maximum refund amount as perthe formula in rule 89(4) or rule 89(5) of the Central Goods and Services Tax
Rules, 2017 (hereinafter referred to as the “ C G S T R u l e s ” ) [formula is applied on the consolidated amount of ITC, i.e. Central tax + State tax/Union Territory tax +Integrated tax + Cess(wherever applicable)];

b) The balance in the electronic credit ledger of the claimant at the end of the tax period for which the refund claim is being filed after the return for the said period has been filed; and

c) The balance in the electronic credit ledger of the claimant at the time of filing the refund application. After calculating the ITC Maximum refund, the Exporter needs to debit (mention) the ITC amount for debiting the Credit Ledger. This will be done in following order:

a) Integrated tax, to the extent of balance available;

b) Central tax and State tax/Union Territory tax, equally to the extent of balance available and in the event of a shortfall in the balance available

and in the event of a shortfall in the balance available in a particular electronic credit ledger (say, Central tax), the differential amount is to be debited from the other electronic credit ledger (i.e., State tax/Union Territory tax, in this case).

This clarification will streamline and give clear interpretation leaving no ambiguity on ITC refund claim application (RFD01A) which is at time differently viewed by the tax officers and exporters.

The procedure described above, however, is not presently available on the common portal. Till the time such facility is made available on the common portal, the taxpayers are advised to follow the order as explained above for all refund applications filed after the date of issue of this Circular.

4. The Circular also clarified on the point of re-credit and detailed explanation is provided with example that in case of ITC being rejected on account in ineligible ITC or any other reason what process of refund must be followed.
Especially where exporters have got ITCrefund rejected / Partial rejected on account of any other reason than the rec
redit of the same should have simultaneously through FORM GSTR RFD 01B
For ITC ineligible under sub sections (1), (2) or (5) of Section 17 of CGST Act, ITC must be re-credited  imultaneously along with issue of Notice under Section 73 or 74 of CGST Act for recovery of ineligible ITC.

5. The Circular has made a very important clarification on refund of ITC being withheld by counter tax authority (Center or State). The circulars states clearly that It is clarified that the remedy for correction of an incorrect or erroneous sanction order lies in filing an appeal against such order and not in withholding of the disbursement of the
sanctioned amount. If any discrepancy is noticed by the disbursing authority, the same should be brought to the notice of the counterpart refund sanctioning authority, the concerned counterpart reviewing authority and the nodal officer, but the disbursal of the refund should not be withheld. It is hereby clarified that neither the State nor the Central tax authorities shall refuse to disburse the amount sanctioned by the counterpart tax authority on any grounds whatsoever, except under sub-section (11) of section 54 of the CGST Act.

6. In an important clarification made under the circular makes it clear that once the claimant has been issued GST RFD 03 under Rule 90(3) mentioning the deficiencies than claimant is required to make a fresh application considering the deficiencies. The amount debited under rule 89(3) shall be re-credited to the electronic ledger and thus refund claim have be filed afresh.

Thus, there is no requirement of Showcause- notices where deficiency memos have been issued. A refund application which is re-submitted after the issuance of deficiency memo shall have to be treated as fresh application.

No order in FORM GSTR RFD-04/06 can be issued in respect of an application against which a deficiency memo has been issued and which has not be resubmitted subsequently.

7. As per provisions of the act refund amount less than Rs. 1,000/- is nor payable. It is have been clarified that this applies on each tax head separately and not cumulatively. However, this limit does not apply of refund of excess balance in electronic cash ledger.

I.AMENDMENT AND CLARIFICATION OF RULE 96(10) OF CGST RULES :

a. The Notification has retrospectively amended (from 23.10.2017) rule 96 (10) to read as :
“(10) The persons claiming refund ofintegrated tax paid on exports of goods or services should not have –

(a) received supplies on which the benefit of the Government of India, Ministry of Finance notification No. 48/2017-Central Tax, dated the 18th October, 2017 published in the Gazette of India, Extraordinary, Part II, Section 3, Subsection (i),vide number G.S.R 1305 (E), dated the 18th October, 2017 or notification No. 40/2017-Central Tax
(Rate), dated the 23rd October, 2017 published in the Gazette of India,Extraordinary, Part II, Section 3, Subsection
(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, Subsection
(i), vide number G.S.R 1321 (E), dated the 23rd October, 2017 has been availed;

or

(b) availed the benefit under notification No. 78/2017-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 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.”.

b. The circular in support of the amendment clarifies that

Rule 96(10) of the CGST Rules, as amended  retrospectively by notification No . 39 / 2018 – Central Tax , dated 04.09.2018 provides that registered persons, including importers, who are directly purchasing / importing supplies on which the benefit of reduced tax incidence or no tax incidence under certain specified notifications has been availed, shall not be eligible for refund of integrated tax paid on export of goods or services.

For example, an importer (X) who is importing goods under the benefit of Advance Authorization/EPCG, is directly
purchasing/importing supplies on which the benefit of reduced/Nil incidence of tax under the specified notifications has been availed.

In this case, the restriction under rule 96(10) of the CGST Rules is applicable to X.

However, if X supplies the said goods, after importation, to a domestic buyer (Y), on payment of full tax, then Y can rightfully export these goods under payment of integrated tax and claim refund of the integrated tax so paid.

However, in the said example if Y purchases these goods from X after availing the benefit of specified notifications, Notification No. 40 / 41 – 0.1%) then Y also will not be eligible to claim refund of integrated tax paid on export of goods or services.

This clarification is removed doubts arising out of drafting of law, however the benefit of  not been able to claim IGST paid refund for exporters availing IGST exemption under Advance Authorisation and/or EPCG seems to us bit unfair and needs to be having more lateral view as all inputs may not have been imported under the scheme or importing only the Capital Goods under EPCG must not become criteria for no IGST Refund.

II. E-WAY BILL RELATED

a. In Rule 138A sub rule (1) a new provision with respect to Imports has been inserted, namely:
“Provided further that in case of imported goods, the person in charge of a conveyance shall also carry a copy of the
bill of entry filed by the importer of such goods and shall indicate the number and date of the bill of entry in Part A of FORM GST EWB-01.”.

b. GST EWB-01 notes sr. no. 7 to substituted he words “SKD or CKD” to “SKD or CKD or supply in batches or lots”

c. A detailed circular on role of Transporter’s Godown for storing of goods and E-Way Bill issue has be separately. Refer Circular No. 61/35/2018-GST Dt. 04th September 2018 http : // www.cbic.gov.in/htdocs cbec/gst/Circular_No.61.pdf

Source : www.universalconnections.in