CBEC clarifies about refund on deemed exports & balance in E-ledger - Circular 24/24/2017

CBEC clarifies about refund on deemed exports & balance in E-ledger - Circular 24/24/2017

Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger

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Circular No.24/24/2017-GST

F. No. 349/58/2017-GST Government of India Ministry of Finance Department of Revenue Central Board of Excise and Customs GST Policy Wing

New Delhi, dated the 21st December, 2017

To, The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /Commissioners of Central Tax (All)The Principal Director Generals / Director Generals (All) Madam/Sir, Sub Manual filing and processing of refund claims on account of inverted dutystructure, deemed exports and excess balance in electronic cash ledger- Reg. Due to the non-availability of the refund module on the common portal, it has beendecided by the competent authority, on the recommendations of the Council, that theapplications/documents/forms pertaining to refund claims on account of inverted dutystructure (including supplies in terms of notification Nos. 40/2017-Central Tax (Rate) and41/2017-Integrated Tax (Rate) both dated 23.10.2017), deemed exports and excess balance inelectronic cash ledger shall be filed and processed manually till further orders. In this regard,the Board, in exercise of its powers conferred under section 168(1) of the Central Goods andServices Tax Act, 2017 hereby clarifies that the provisions of Circular No. 17/17/2017-GST dated 15.11.2017 shall also be applicable to the following types of refund inasmuch as theypertain to the method of filing of the refund claim and its processing which is consistent withthe relevant provisions of the CGST Act, 2017 (hereafter referred to as the CGST Act) andthe CGST Rules, 2017 (hereafter referred to as the CGST Rules):-

(i) refund of unutilized input tax credit where the credit has accumulated on accountof rate of tax on inputs being higher than the rate of tax on output supplies (other thannil rated or fully exempt supplies) of goods or services or both except those supplieswhich are notified by the Government on the recommendations of the Council (section 54(3) of the CGST Act refers);

(ii) refund of tax on the supply of goods regarded as deemed exports; and

(iii) refund of balance in the electronic cash ledger.

2.0 It is clarified that refund claims in respect of zero-rated supplies and on account ofinverted duty structure, deemed exports and excess balance in electronic cash ledger shall befiled for a tax period on a monthly basis in FORM GST RFD-01A. However, in caseregistered persons having aggregate turnover of up to Rs 1.5 crores in the preceding financial year or the current financial year are opting to file FORM GSTR-1 quarterly (notificationNo. 57/2017-Central Tax dated 15.11.2017 refers), such persons shall apply for refund on aquarterly basis. Further, it is stated that the refund claim for a tax period may be filed onlyafter filing the details in FORM GSTR-1 for the said tax period. It is also to be ensured that a valid return in FORM GSTR-3B has been filed for the last tax period before the one inwhich the refund application is being filed. Since the date of furnishing of FORM GSTR 1from July, 2017 onwards has been extended while the dates of furnishing of FORM GSTR 2and FORM GSTR 3 for such period are yet to be notified, it has been decided by the competent authority to sanction refund of provisionally accepted input tax credit at thisjuncture. However, the registered persons applying for refund must give an undertaking to theeffect that the amount of refund sanctioned would be paid back to the Government withinterest in case it is found subsequently that the requirements of clause (c) of sub-section (2) of section 16 read with sub-section (2) of sections 42 of the CGST Act have not beencomplied with in respect of the amount refunded. This undertaking should be submittedmanually along with the refund claim till the same is available in FORM RFD-01A on thecommon portal.

3.0 In case of refund claim arising due to inverted duty structure, the following statements- Statement 1 and Statement 1A of FORM GST RFD-01A have to be filled:-

Statement -1 [rule 89(5)]

Refund Type: ITC accumulated due to inverted tax structure [clause (ii) of first proviso tosection 54(3)]

(Amount in Rs.)

Turnover of inverted rated supply of goods	Tax payable on such inverted rated supply of goods	Adjusted total turnover	Net input tax credit	Maximum refund amount to be claimed [(143)-2]
1	2	3	4	5

Statement 1A [rule 89(2)(h)]

Refund type: ITC accumulated due to inverted tax structure [clause (ii) of first proviso to section54(3)]

Sr. No.	Details of invoices of inward supplies received			Tax paid on inward supplies			Details of invoices of outward supplies issued			Tax paid on outward supplies
	No.	Date	Taxable Value	Integrated Tax	Central Tax	State / Union territory Tax	No.	Date	Taxable Value	Integrated Tax	Central Tax	State / Union territory Tax
1	2	3	4	5	6	7	8	9	10	11	12	13

4.0 Whereas, the Government has issued notification No. 48/2017-Central Tax dated18.10.2017 under section 147 of the CGST Act wherein certain supplies of goods have beennotified as deemed export. Further, the third proviso to rule 89(1) of the CGST Rules allowsthe recipient or the supplier to apply for refund of tax paid on such deemed export supplies. In case such refund is sought by the supplier of deemed export supplies, the documentaryevidences as specified in notification No. 49/2017-Central Tax dated 18.10.2017 are alsorequired to be furnished which includes an undertaking by the recipient of deemed exportsupplies that he shall not claim the refund in respect of such supplies and that no input tax credit on such supplies has been availed of by him. The undertaking should be submittedmanually along with the refund claim. Similarly, in case the refund is filed by the recipient ofdeemed export supplies, an undertaking by the supplier of deemed export supplies that heshall not claim the refund in respect of such supplies is also required to be furnished manually. The procedure regarding procurement of supplies of goods from DTA by ExportOriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / SoftwareTechnology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export aslaid down in Circular No. 14/14/2017-GST dated 06.11.2017 needs to be complied with. 4.1 Further, as per the provisions of rule 89(2)(g) of the CGST Rules, the followingstatement 5B of FORM GST RFD-01A is required to be furnished for claiming refund onsupplies declared as deemed exports:-

Statement 5B [rule 89(2)(g)]

Refund type: On account of deemed exports

(Amount in Rs)

Sr. No.	Details of invoices of outward supplies in case refund is claimed by supplier/ Details of invoices of inward supplies in case refund is claimed by recipient			Tax paid
	No.	Date	Taxable Value	Integrated Tax	Central Tax	State / Union territory Tax	Cess
1	2	3	4	5	6	7	8

5.0 It is reiterated that para 2.5 of Circular No. 17/17/2017-GST dated 15.11.2017 may bereferred to in order to ascertain the jurisdictional proper officer to whom the manualapplication for refund is to be submitted. Where any amount claimed as refund is rejectedunder rule 92 of the CGST Rules, either fully or partly, the amount debited, to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GSTRFD-1B until the FORM GST PMT-03 is available on the common portal. Further, thepayment of the sanctioned refund amount shall be made only by the respective tax authorityof the Central or State Government. Thus, the refund order issued either by the Central taxauthority or the State tax/UT tax authority shall be communicated to the concerned counter-part tax authority within seven working days for the purpose of payment of the relevantsanctioned refund amount of tax or cess, as the case may be. This time limit of seven workingdays is also applicable to refund claims in respect of zero-rated supplies being processed asper Circular No. 17/17/2017-GST dated 15.11.2017 as against the time limit of three daysprescribed in para 4 of the said Circular. It must be ensured that the timelines specified undersection 54(7) and rule 91(2) of the CGST Rules for the sanction of refund are adhered to.

6.0 In order to facilitate sanction of refund amount of central tax and State tax by therespective tax authorities, it has been decided that both the Central and State Tax authorityshall nominate nodal officer(s) for the purpose of liasioning through a dedicated e-mail id.Where the amount of central tax and State tax refund is ordered to be sanctioned provisionally by the Central tax authority and a sanction order is passed in accordance withthe provisions of rule 91(2) of the CGST Rules, the Central tax authority shall communicatethe same, through the nodal officer, to the State tax authority for making payment of thesanctioned refund amount in relation to State tax and vice versa. The aforesaid communication shall primarily be made through e-mail attaching the scanned copies of thesanction order [FORM GST RFD-04 and FORM GST RFD-06], the application for refundin FORM GST RFD-01A and the Acknowledgement Receipt Number (ARN). Accordingly,the jurisdictional proper officer of Central or State Tax, as the case may be, shall issueFORM GST RFD-05 and send it to the DDO for onward transmission for release ofpayment. After release of payment by the respective PAO to the applicants bank account, thenodal officer of Central tax and State tax authority shall inform each other. The manner ofcommunication as referred earlier shall be followed at the time of final sanctioning of therefund also.

7.0 In case of refund claim for the balance amount in the electronic cash ledger, uponfiling of FORM GST RFD-01A as per the procedure laid down in para 2.4 of Circular No.17/17/2017-GST dated 15.11.2017, the amount of refund claimed shall get debited in theelectronic cash ledger.

8.0 It is also clarified that the drawback of all taxes under GST (Central Tax, IntegratedTax, State/Union Territory Tax) should not have been availed while claiming refund ofaccumulated ITC under section 54(3)(ii) of the CGST Act. A declaration to this effect formspart of FORM GST RFD-01A as well.

9.0 It is requested that suitable trade notices may be issued to publicize the contents ofthis circular.

10.0 Difficulty, if any, in implementation of the above instructions may please be broughtto the notice of the Board.

11.0 Hindi version would follow.

(Upender Gupta)

Commissioner (GST)

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