ICAI, Hyderabad 25th June, 2018Export Refund Under GST by CA Manindar K Partner M/s SBS and Company LLP manindar@sbsandco.com +91 9700734609
Coverage Procedural Aspects relating to Refund claims Interest for delayed Refunds Zero Rated Supplies Credit of Amount Rejected as Refund Claims Detailed Analysis of Section 54 Types of Export Refunds under GST Export of Goods upon Payment of IGST Export of Services upon Payment of IGST Export of Goods/services under BOND/LUT Export of Goods/Services to SEZ Refund if any for Supplies to Merchant Exporter Refund for Deemed Exports2 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero Rated Supplies3
Zero-Rated Supplies16. (1) “zero rated supply” means any of the following supplies of goods or services or both, namely:–– (a) export of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.(2) Subject to the provisions of sub-section (5) of section 17 of the Central Goods and Services Tax Act, credit of input tax may beavailed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:– (a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit; or (b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied,in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.4 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Following supplies are zero-rated: Export of goods or services Supplies to SEZ unit or SEZ developer Section 2(5) of IGST Act, 2017 defines ‘Export of Goods’ to mean taking goods out of India to a place outside India Section 2(6) of IGST Act, 2017 defines ‘Export of Service’ to mean any service when Supplier of service is located in India Recipient of service is located outside India Place of supply of service is outside India Payment for such service has been received in CFE Supplier and recipient of service are not mere establishments of distinct persons5 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Input tax credit can be availed for zero-rated supplies not withstanding that such supply is an exempt supply A registered person making zero-rated supplies shall be eligible to claim refund of ITC either of the following options; Supply the goods or services under bond/LUT without payment of integrated tax and claim refund of ITC Supply the goods or services by paying integrated tax and claim refund of such tax6 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated SuppliesCase Study#1:Mr. X of Delhi is having 20 years of rich experience in the field of aeronautical engineering. He has beenappointed as a technical consultant by Transworld Aviation FZE, UAE. The services are mainly undertaken byusing electronic means viz. email, video conferencing etc. Payment is made in CFE. Mr. X is having negligibleexpenditure in the form of internet services in order to provide these services. He does not have any intentionto claim refund of GST paid on internet services. Does Mr. X is required to register, execute Bond/LUT in orderto export these services?7 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Section 16 mandates the requirement of Bond/LUT only when the exporter intends to claim refund. IGST Act, 2017 unconditionally provides that a service is zero-rated if it exported in terms of section 2(6). Rule 96A of CGST Rules, 2017.Refund of integrated tax paid on export of goods or services under bond or Letter of Undertaking.-Any registered person availing the option to supply goods or services for export without payment of integrated tax shall furnish,prior to export, a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner, binding himself to paythe tax due along with the interest specified under sub-section (1) of section 50 within a period of -(a) fifteen days after the expiry of three months, 2[or such further period as may be allowed by the Commissioner,] from the date ofissue of the invoice for export, if the goods are not exported out of India; or(b) fifteen days after the expiry of one year, or such further period as may be allowed by the Commissioner, from the date of issue ofthe invoice for export, if the payment of such services is not received by the exporter in convertible foreign exchange.8 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Para 4 of Circular No. 37/11/2018-GST:4. Exports without LUT: Export of goods or services can be made without payment of integrated tax under theprovisions of rule 96A of the Central Goods and Services Tax Rules, 2017 (the CGST Rules). Under the said provisions,an exporter is required to furnish a bond or Letter of Undertaking (LUT) to the jurisdictional Commissioner beforeeffecting zero rated supplies. A detailed procedure for filing of LUT has already been specified vide Circular No.8/8/2017 –GST dated 4th October, 2017. It has been brought to the notice of the Board that in some cases, such zerorated supplies have been made before filing the LUT and refund claims for unutilized input tax credit have been filed.4.1. In this regard, it is emphasized that the substantive benefits of zero rating may not be denied where it has beenestablished that exports in terms of the relevant provisions have been made. The delay in furnishing of LUT in suchcases may be condoned and the facility for export under LUT may be allowed on ex post facto basis taking into accountthe facts and circumstances of each case.9 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Para 5 of Circular No. 37/11/2018-GST:5.1 It has been reported that the exporters have been asked to pay integrated tax where the goods have beenexported but not within three months from the date of the issue of the invoice for export. In this regard, it isemphasized that exports have been zero rated under the Integrated Goods and Services Tax Act, 2017 (IGST Act)and as long as goods have actually been exported even after a period of three months, payment of integratedtax first and claiming refund at a subsequent date should not be insisted upon. In such cases, the jurisdictionalCommissioner may consider granting extension of time limit for export as provided in the said sub-rule on postfacto basis keeping in view the facts and circumstances of each case. The same principle should be followed incase of export of services. Though the Rule 96A is mandating the requirement of Bond/LUT prior to export without payment of IGST,the same was insisted under Section 16, only for the purposes of claiming refund. No demand shall beinsisted upon if the goods or services are ultimately exported.10 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated SuppliesCase Study#2 Xlent Resorts has provided convention services to Tech Soft Ltd (SEZ Unit) towards an annual event. As the services are supplied to SEZ (zero-rated), Xlent Resorts has not charged any GST. During Department Audit, it has been identified that convention services are not among the authorized services of Tech Soft Ltd and accordingly alleged that their services does not qualify as zero-rated supply. Accordingly, GST is demanded from Xlent Resorts. Whether Xlent Resorts is required to pay GST?11 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Second Proviso to Rule 89 of CGST Rules, 2017:Provided further that in respect of supplies to a Special Economic Zone unit or a Special Economic Zonedeveloper, the application for refund shall be filed by the –(a) supplier of goods after such goods have been admitted in full in the Special Economic Zone for authorizedoperations, as endorsed by the specified officer of the Zone;(b) supplier of services along with such evidence regarding receipt of services for authorized operations asendorsed by the specified officer of the Zone;12 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Zero-Rated Supplies Para 2.2 of Circular No. 48/22/2018-GST:A conjoint reading of the above legal provisions reveals that the supplies to a SEZ developer or a SEZ unit shallbe zero rated and the supplier shall be eligible for refund of unutilized input tax credit or integrated tax paid, asthe case may be, only if such supplies have been received by the SEZ developer or SEZ unit for authorizedoperations. An endorsement to this effect shall have to be issued by the specified officer of the Zone. Section 26(1)(e): Exemption from service tax under Chapter-V of the Finance Act, 1994 on taxable services provided to a Developer or Unit to carry on the authorised operations in a Special Economic Zone. IGST Act, 2017 is an enabling Act to grant GST exemptions that are conferred under SEZ Act, 2005 which only limits the exemption to authorized operations. Harmonious interpretation should be adopted to reconcile the inconsistencies between two legislations.13 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Detailed Analysis of Section 54 (Refund)14
Refund of Tax {Section 54 of CGST Act, 2017}Section 54 contains 14 Sub-sections and an ExplanationSnapshot of the said sectionSub- Section ParticularsSub-section (1) Refund of Tax, Interest or any other amount paid in GeneralSub-section (2) Refund of tax paid on inward supplies received by UNO, MFIs and other notified organisationsSub-section (3) Refund of unutilised ITC relating to zero rated supplies and supplies having inverted tax structureSub-section (4) Documentary Evidence to be submitted with refund applicationSub-section (5) Processing of refund claimSub-section (6) Provisional refund of 90% of claim amount in case of refunds due to zero-rated suppliesSub-section (7) Time limit to dispose of the claims15 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of Tax {Section 54 of CGST Act, 2017}Sub- Section ParticularsSub-section (8) &(9) Unjust Enrichment and the exceptionsSub-section (10) Withholding of refund or Deduction of refund amount with other tax duesSub-section (11) Withholding of Refund pending Appellate proceedingsSub-section (12) Interest for delayed sanction of RefundSub-section (13) Refund in case of advance tax paid by Casual and Non-Resident taxable personsSub-section (14) No refund is permissible if claim amount is less than Rs 1000/-Explanation Refund and Relevant Date to determine time limit for filing refund claim16 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of Tax, Interest and Other Amounts Paid Sub-Section (1):Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, maymake an application before the expiry of two years from the relevant date in such form and manner as may beprescribed:Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with theprovisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in suchmanner as may be prescribed.Explanation.-For the purposes of this section,––(1) “refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or inputservices used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports,or refund of unutilised input tax credit as provided under sub-section (3).17 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of Tax, Interest and Other Amounts Paid Sub-section provides for refund of tax, interest and any other amount paid. Instances leading to refund claim includes erroneous payment of tax, excess payment on account of rate or exemption issue, export of goods or services, deemed exports Refund can be claimed by filing application within two years from the relevant date. Section 54 is not applicable to claim refund of any balance in electronic cash ledger.18 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of Tax for UNO, MFIs etc Sub-Section (2):A specialized agency of the United Nations Organisation or any Multilateral Financial Institution andOrganisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate orEmbassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to arefund of tax paid by it on inward supplies of goods or services or both, may make an application for suchrefund, in such form and manner as may be prescribed, before the expiry of six months from the last day ofthe quarter in which such supply was received.19 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of Tax for UNO, MFIs etc Under the erstwhile regime, the exemptions are abinito. Under the GST regime, the exemptions are conferred by way of refund of tax paid on inward supplies received by these organizations. The time limit to claim refund is on or before six months from the last day of quarter in which supply was received.20 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of ITC in case of Zero-Rated Supplies &Inverted Tax Structure Sub-Section (3):Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end ofany tax period:Provided that no refund of unutilised input tax credit shall be allowed in cases other than––(i) zero rated supplies made without payment of tax;(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (otherthan nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on therecommendations of the Council:Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India aresubjected to export duty:Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback inrespect of central tax or claims refund of the integrated tax paid on such supplies.21 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund of ITC in case of Zero-Rated Supplies &Inverted Tax Structure Unutilized ITC can be claimed as refund in cases of zero-rated supplies and supplies involving inverted tax structure Zero-Rated Supplies includes exports and supplies to SEZ No refund is allowed if exports are subject to export duty or drawback relating to Central tax or Integrated tax is claimed. Inverted tax structure should be on account of higher tax on inputs as compared to tax on output supplies. No refund is allowed if ITC is accumulated on account of higher tax on input services. Government may on council recommendations, notify the supplies of goods or services on which refund cannot be claimed on account of inverted duty structure. Notification 5/2017-CT(Rate) and Notification 15/2017-CT(Rate) are issued in this regard22 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Documentary Evidence Sub-section (4):The application shall be accompanied by–(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant mayfurnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid inrelation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax andinterest had not been passed on to any other personProvided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for theapplicant to furnish any documentary and other evidences but he may file a declaration, based on thedocumentary or other evidences available with him, certifying that the incidence of such tax and interest had notbeen passed on to any other person.23 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Documentary Evidence Documentary evidence includes invoices, shipping bills, FIRCs/BRCs etc In case of claims hit by unjust enrichment, evidence should also be provided to prove that the incidence of tax and interest has not been passed on. No need to submit the documents for claim amounts less than two lakhs24 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Processing of Refund Sub-Sections (5),(6)&(7):(5) If, on receipt of any such application, the proper officer is satisfied that the whole or part of the amount claimed as refundis refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to insection 57.(6) Notwithstanding anything contained in sub-section (5), the proper officer may, in the case of any claim for refund onaccount of zero-rated supply of goods or services or both made by registered persons, other than such category of registeredpersons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninetyper cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner andsubject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under sub-section (5)for final settlement of the refund claim after due verification of documents furnished by the applicant.(7) The proper officer shall issue the order under sub-section (5) within sixty days from the date of receipt of applicationcomplete in all respects.25 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Processing of Refund Every application for refund shall be processed within 60 days from the date of receipt of application. In case of refund of ITC on zero-rated supplies, 90% of the claim amount shall be refunded on provisional basis.26 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Unjust Enrichment and the Exceptions Sub-Sections (8) & (9):(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, ifsuch amount is relatable to- (a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies; (b) refund of unutilised input tax credit under sub-section (3); (c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued; (d) refund of tax in pursuance of section 77; (e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any otherperson; or (f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify.(9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any otherprovisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with theprovisions of sub-section (8)27 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Unjust Enrichment and the Exceptions Refund is granted subject to satisfaction by claimant as to no unjust enrichment is involved. Otherwise, the refund claim amount shall be transferred to a fund Principle of unjust enrichment should be followed notwithstanding anything contrary in any judgment or provisions of the Act Unjust enrichment is not applicable in the following cases; Refund of tax or ITC on zero-rated supplies Refund of unutilized ITC on account of inverted tax structure Refund of tax paid on supply not provided for which invoice is not issued or refund voucher has been issued Refund of inter-state taxes paid as intra-state taxes or vice versa as provided in section 77 Tax or interest incidence borne by such class of recipients as Central Government may notify28 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Withholding or deducting of Refund due Sub-Section (10):(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who isrequired to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specifieddate, the proper officer may-(a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case maybe;(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but whichremains unpaid under this Act or under the existing law.Explanation.––For the purposes of this sub-section, the expression “specified date” shall mean the last date for filing an appeal underthis Act.29 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Withholding or deducting of Refund due Withholding or adjustment against dues is allowed only if the refund sanctioned is unutilized ITC on account of zero-rated supplies or inverted tax structure. Refund amount will be withheld pending compliance for return, tax, interest, penalty. Refund amount can be adjusted against dues towards tax, interest, penalty, fee or any other amount30 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Withholding of Refund pending Proceedings Sub-Section (11) & (12):(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where anyother proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likelyto adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed,he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he maydetermine.(12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained insection 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendationsof the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.31 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Withholding of Refund pending Proceedings Withholding of refund can be made if the following conditions are satisfied; Appeal against such refund claim is due or any other proceeding is pending under this Act Grant of refund is like to adversely affect the revenue. Interest at 6% is payable for the withholding period.32 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Relevant Date for Time Limit to file Refund Claim Situation Relevant DateExport of Goods By Air or Sea: Date on which goods leave India By Road: Date on which goods cross the frontiersDeemed Exports By Post: Date of despatch of goods by post officeServices exported outside India The date on which return relating to deemed exports is filedRefund pursuant to a JudgmentRefund on account of inverted tax structure Date of receipt of CFE if services are supplied prior to paymentTax paid under Provisional assessmentRefund claimed by a person other than supplier Date of invoice if payment is already receivedAny other case Date of communication of such judgment From the end of financial year in which claim for refund arises The date of adjustment of such tax after final assessment Date of receipt of goods or services Date of payment of Tax33 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Types of Export Refunds under GST Zero-Rated Supplies under GST Refund of IGST paid on Export of Goods Refund of IGST paid on Export of Services Refund of ITC on Export of Goods and Services under bond/LUT Refund of ITC/IGST paid on supplies to SEZ Refunds involved in supplies to Merchant Exporter at concessional rate Refund under deemed Exports34
Refund Related to Zero-Rated Supplies Applicability of RulesExport and Supplies to Export by paying Export by payment of SEZ under Bond/LUT integrated tax integrated tax under Bond/LUTRule 89 Rule 96 Rule 96A Refund of ITC for exports and supplies to SEZ under Bond/LUT shall be claimed by following the procedure prescribed under Rule 89 to Rule 94 Refund of Integrated tax paid for export of goods or services shall be claimed by following the procedure prescribed under Rule 96 Refund of Integrated tax paid for export of goods or services under Bond/LUT shall be claimed by following Rule 96A along with general procedure under Rule 89 to 94 to the extent applicable35 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Export under Bond/LUT vis-à-vis Payment of IGST Rule 89 facilitates exporters to claim refund of ITC availed on inputs and input services. ITC availed on capital goods cannot be claimed as refund if export under bond/LUT is undertaken. Refund of ITC availed on capital goods can be claimed by paying IGST upon export of goods or services.Particulars Situation I Situation IITurnover of Exports 50,00,000 50,00,000Rate of GST applicable 18% 18%ITC on Inputs 2,00,000 2,00,000ITC on input services 1,00,000 1,00,000ITC on capital goods 3,00,000 Nil36 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96-Refund of Integrated Tax Paid on Exports The shipping bill filed at the time of export shall be deemed to be an application filed for refund of integrated tax paid on goods exported outside India provided the following two conditions are satisfied; The person in charge of the conveyance carrying the export goods duly files the export manifest covering shipping bill of the exporter. The exporter should have filed a valid GSTR-3B Details of relevant export invoices as submitted in GSTR-1 shall be transmitted electronically to ICEGATE in order to confirm that goods covered by said invoices are exported. Pending filing of GSTR-1, exporters can fill the export details in table 6A of GSTR-1 Upon electronic confirmation of export of goods and filing of returns, the proper officer of Customs shall process the refund claim and the amount shall be credited to the bank account of exporter through PFMS.37 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96-Refund of Integrated Tax Paid on Exports The refund claim may be withheld by proper officer of Customs where a request has been received from Jurisdictional officer to withhold it in accordance with the provisions of sub-sections (10) and (11) of section 54. Where the goods are exported in violation of the provisions of Customs Act, 1962 Withholding details are communicated to applicant in Part B of Form GST RFD-07. If the applicant becomes entitled to refund later on, the same shall be allowed in Form GST RFD-06 Application for refund of integrated tax paid on services shall be undertaken in accordance with Rule 8938 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96-Refund of Integrated Tax Paid on Exports Applicant claiming refund of integrated tax paid on export of goods or services should not have received goods from a supplier who has availed any of the following benefits Benefit of Deemed Exports Supplied goods at a concessional rate of 0.1% Availed benefits under EOU Supplier has imported any goods under EPCG, Advance Authorization schemes In all these cases, the person exporting the goods should export without payment of Integrated tax under Bond/LUT. This condition is prescribed to avoid excess claims39 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96 Refund-Common Errors & Rectification Following are the common errors for rectificationERROR MEANING RECTIFICATION MEASURESCODESB000 Successfully Validated Records found matching without errorsSB001 Invalid SB details Amending Table 6A of GSTR-1 using Table 9A of GSTR-1SB002 EGM not filed Exporter to approach shipping line to ensure electronic filingSB003 GSTIN Mismatch Guide Released by Amending Table 6A. Declaration from other entity of same PANSB004 Directorate Systems that no refund is claimed against the SB. Record already received and validated Duplicate Record can be eliminated in GSTR-1SB005 Invalid Invoice Number Clerical Error (Amend GSTR-1). Two sets maintained (Concordance Circular 5/2018-Cus dt 23.02.2018 Table)SB006 Gateway EGM not available Requesting shipping line to file supplementary EGMs electronically Circular 8/2018-Cus dt 23.03.2018 for the period July’17 to October’18. Has decided to allow officer interface by DG (sys) to rectify this error40 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96- Refund Common Errors & Rectification Difference in Export Turnover disclosed between GSTR-1 and GSTR-3B Customs policy wing would prepare a list of such exporters and share the list to GSTN. GSTN shall share the details to exporters through emails. Cases where there is no short payment CA Certificate should be submitted on or before 31st October 2018 at the Customs Office and Jurisdictional GST office. Non-submission of CA Certificate will affect future refunds. Cases where there is short payment Short payment shall be met and submit self- certified proof of payment to AC/DC of Customs. CA Certificate should also be submitted in all cases the short fall involved is more than Rs. 10 lakhs41 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96-Refund of Integrated Tax Paid on Exports Applicant claiming refund of integrated tax paid on export of goods or services should not have received goods from a supplier who has availed any of the following benefits Benefit of Deemed Exports Supplied goods at a concessional rate of 0.1% Availed benefits under EOU Supplier has imported any goods under EPCG, Advance Authorization schemes In all these cases, the person exporting the goods should export without payment of Integrated tax under Bond/LUT. This condition is prescribed to avoid excess claims by adjusting ITC related to domestic supplies.42 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Rule 96A-Refund of Integrated Tax Paid on Exportsunder Bond/LUT This Rule provides that any registered person availing the option to export goods or services without payment of integrated tax is required to furnish a bond or LUT in Form GST RFD-11 binding himself; To pay tax within 15 days after the expiry of three months from the date of issue of invoice for export if goods are not exported out of India To pay tax within 15 days after the expiry of one year from the date of invoice if payment for such service is not received in CFE Failure to export the goods or services or pay integrated tax within the time limit specified above will result in bond/LUT being withdrawn for recovery of tax. The withdrawn bond/LUT shall be restored when the registered persons pays the amount due. If the goods or services are ultimately exported, then refund can be claimed by following the procedure under Rule 9643 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund claim under Rule 89 The following exporters are covered under this rule Exporter of goods exporting under bond/LUT without payment of Integrated tax Exporter of services exporting under bond/LUT without payment of Integrated tax Exporter of services by paying integrated tax. In case of exports under bond/LUT without payment of tax, the refund is of ITC which can be claimed as refund only after debiting an equivalent amount in electronic credit ledger. Sub-rule (4A) provides that exporter of goods is entitled to claim refund of ITC availed on input services and other inputs used in export but not inputs for which the supplier has availed the benefit of deemed exports Sub-rule (4B) provides that exporter of goods is entitled to claim refund of ITC availed on input services and other inputs used in export but not inputs for which the supplier has availed the benefit of EPCG, Advance Authorisation, Supply at concessional rate.44 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Refund claim under Rule 89 In case of export of goods or services, the amount of ITC that is eligible for refund shall be computed as under;Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x NetITC ÷Adjusted Total Turnover Net ITC: means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both Adjusted Total Turnover: means the turnover in a state or union territory excluding value of exempt supplies and the turnover of supplies in respect of which refund is claimed under Rule (4A) or (4B) or both during the relevant period. Relevant period is defined as the period for which refund is claimed.45 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Inverted Tax Structure To claim refund of ITC due to inverted tax structure, the claim shall be field under Rule 89. Supplier to Merchant Exporters can claim refund under inverted tax structure; Maximum amount that can be claimed as refund is as follows;Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC ÷Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services.46 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Supplies to SEZ This is the second type of zero-rated supply The supplier can claim refund of integrated tax paid on supplies to SEZ In cases where the supplier has taken bond/LUT, then refund can be claimed of the availed ITC. Application for refund can be filed by supplier of goods only after such goods have been admitted in full in SEZ for authorized operations as endorsed by the specified officer of zone. Application filed by supplier of services along with evidence regarding receipt of services for authorized operations as endorsed by specified officer of the zone.47 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Supplies to Merchant Exporter Notification 40/2017-CGST(Rate) and Notification 41/2017-IGST(Rate) provides for concessional rate of GST at 0.1% for supplies to merchant exporter. The following are the conditions to be satisfied: . Both the supplier and recipient merchant exporter are registered under GST and the supplier should issue a tax invoice to the recipient. The recipient shall be registered with an Export Promotion Council or a Commodity Board Recognised by Department of Commerce The Supply Order issued by recipient shall require the corresponding supplier to supply goods at a concessional rate as per this notification. A copy of such supply order shall also be provided to the Suppliers’ Jurisdictional tax officer. The recipient shall export the goods within a period of 90 days from the date of issue of invoice by supplier. The recipient while exporting the goods shall indicate in shipping bill, the GSTN and tax invoice number of the supplier. When the goods are exported, a copy of shipping bill or bill of export and proof of export general manifest or export reportfiled shall be provided by recipient to the supplier and also to the jurisdictional tax officer of such supplier.48 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Supplies to Merchant Exporter The merchant exporter who receives the goods is required to export the goods under bond/LUT. He can claim refund of 0.1% tax paid on the said goods received from supplier along with input tax paid on any input services received by them in connection with this export In cases where exports are made by payment of tax, he is not eligible for refund. The supplier who supplies goods to merchant exporter at 0.1% may end up in accumulating excess ITC than his output tax. In such case he can file refund of ITC treating the case as that of inverted tax structure.49 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Deemed Exports Section 147 of CGST Act, 2017 empowers CG to notify certain supplies of goods which does not leave India as deemed exports. Notification 48/2017-Central Tax lists down the following transactions as deemed exports. Supply of goods by a registered person against advance authorization Supply of capital goods by a registered person against EPCG Authorisation Supply of goods by a registered person to EOU In terms of section 54, the tax paid on deemed exports shall be eligible for refund. Rule 89 provides that the refund claim can be filed either by recipient or the supplier. In order to consider the supplier’s claim for refund, the recipient of deemed exports should give anundertaking that no input tax credit has been availed on the said deemed exports.50 manindar@sbsandco.com www.sbsandco.com +91 9700734609
Search
