GST: CBIC issues Clarification on Refund related issues
The Central Board of Indirect Taxes and Customs (CBIC) notified the clarifications on refund related issues.
The Board has received various representations seeking clarification on some of the issues relating to GST refunds. The issues have been examined and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017(hereinafter referred to as “CGST Act”) has issued various clarification.
The Board while issuing clarification in respect of refund claim by recipient of Deemed Export Supply said that Para 41 of Circular No. 125/44/2019 – GST dated 18/11/2019 has placed a condition that the recipient of deemed export supplies for obtaining the refund of tax paid on such supplies shall submit an undertaking that he has not availed ITC on invoices for which refund has been claimed. Thus, in terms of the above circular, the recipient of deemed export supplies cannot avail ITC on such supplies but when they proceed to file a refund on the portal, the system requires them to debit the amount so claimed from their Electronic Credit Ledger.
“There is no restriction on the recipient of deemed export supplies in availing ITC of the tax paid on such supplies when the recipient files for a refund claim. The said restriction has been placed by the Circular No. 125/44/2019-GST dated 18.11.2019,” the CBIC clarified.
In order to ensure that there is no dual benefit to the claimant, the portal allows refund of only Input Tax Credit (ITC) to the recipients which is required to be debited by the claimant while filing an application for refund claim. Therefore, whenever the recipient of deemed export supplies files an application for refund, the portal requires a debit of the equivalent amount from the electronic credit ledger of the claimant.
The Board has clarified that Para 26 of Circular No. 125/44/2019-GST dated 18th November 2019 gave a clarification in relation to cases where taxpayers had inadvertently entered the details of export of services or zero-rated supplies to a Special Economic Zone Unit/Developer in table 3.1(a) instead of table 3.1(b) of FORM GSTR-3B of the relevant period and were unable to claim refund of the integrated tax paid on the same through FORM GST RFD-01A. This was because of a validation check placed on the common portal which prevented the value of refund of integrated tax/cess in FORM GST RFD-01A from being more than the amount of integrated tax/cess declared in table 3.1(b) of FORM GSTR-3B. The said Circular clarified that for the tax periods from 01.07.2017 to 30.06.2019, such registered persons shall be allowed to file the refund application in FORM GST RFD-01A on the common portal subject to the condition that the amount of refund of integrated tax/cess claimed shall not be more than the aggregate amount of integrated tax/cess mentioned in the tables 3.1(a), 3.1(b) and 3.1(c) of FORM GSTR-3B filed for the corresponding tax period.
“Since the clarification issued vide the above Circular was valid only from 01.07.2017 to 30.06.2019, taxpayers who committed these errors in subsequent periods were not able to file the refund applications in FORM GST RFD-01A/ FORM GST RFD-01,” the CBIC said.
Sub-rule (4) of Rule 89 prescribes the formula for computing the refund of unutilised ITC payable on account of zero-rated supplies made without payment of tax. The formula prescribed under Rule 89 (4) is reproduced as “Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover”.
It has been clarified that for the purpose of Rule 89(4), the value of export/ zero- rated supply of goods to be included while calculating “adjusted total turnover” will be same as being determined as per the amended definition of “Turnover of zero-rated supply of goods” in the said sub-rule. The same can be explained by the following illustration where actual value per unit of goods exported is more than 1.5 times the value of same/ similar goods in the domestic market, as declared by the supplier.