CBIC clarifies various refund related issues
Central Board of Indirect Taxes and Customs (CBIC) has issued Circular No. 59/2018 dated 4th September, 2018 to clarify various issues relating to processing of refund claims, situations under which refund claim shall be inadmissible and the status of refund claim after issuance of deficiency memo.
The Key points of the Circular are:
- Submission of invoices for processing of claims of refund:
The registered persons who were claiming refund were required to submit the invoices relating to inputs, input services and capital goods for processing of claims for refund of integrated tax where services are exported with payment of integrated tax; and invoices relating to inputs and input services were to be submitted for processing of claims for refund of input tax credit where goods or services are exported without payment of integrated tax. This was a very cumbersome process for the trade and industry. So the Government has come up with the clarification that the refund claim shall 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 and shall grant the refund to the claimant.
- Re-credit of electronic credit ledger in case of rejection of refund claim:
In case of rejection of refund claim of unutilized ITC on account of ineligibility of the said credit, the proper officer shall order for the rejected amount to be re-credited to the electronic credit ledger of the claimant using FORM GST RFD-01B. For recovery of this amount, a demand notice shall be issued to the claimant. In case the demand is confirmed by an order the said amount shall be added to the electronic liability register of the claimant through FORM GST DRC- 07. Alternatively, the claimant can voluntarily pay this amount, along with interest and penalty, if applicable, before service of the demand notice.
In case of rejection of refund claim of unutilized ITC on account of any reason other than the eligibility of credit, the rejected amount shall be re-credited to the electronic credit ledger of the claimant using FORM GST RFD-01B.
- Scope of Rule 96(10) of the CGST Rules:
Rule 96(10) of the CGST Rules has been amended retrospectively to include 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.
- Status of refund claim afterissuance of deficiency memo:
In case of any deficiencies in the application for refund claim are noticed, the proper officer shall communicate the deficiencies to the claimant in FORM GST RFD-03, requiring him to file a fresh refund application after rectification of such deficiencies. It has come to the notice of the Government that certain field formations are issuing show cause notices to the claimants in cases where the refund application is not re-submitted after the issuance of a deficiency memo. These show-cause-notices are being subsequently adjudicated and orders are being passed in FORM GST RFD-04/06. The Government has clarified that show-cause-notices are not required to be issued where deficiency memos have been issued. A refund application which is re-submitted after the issuance of a deficiency memo shall have to be treated as a fresh application. No order in FORM GST RFD-04/06 can be issued in respect of an application against which a deficiency memo has been issued and which has not been resubmitted subsequently.
- Treatment of refund applications where theamount claimed is less than rupees one thousand:
As per the relevant provisions of the CGST Act, 2017, no refund shall be paid to the applicant where the refund amount is less than thousand rupees. In this regard, it is clarified that the limit of rupees one thousand shall be applied for each tax head separately and not cumulatively. The limit would not apply in cases of refund of excess balance in the electronic cash ledger. All field formations are requested to reject claims of refund from the electronic credit ledger for less than one thousand rupees and recredit such amount by issuing an order in FORM GST RFD-01B.
For further information please refer the attached document.