Refund Under GST | How to File Refund under GST :

The basic purpose behind this article is to get understanding on How to get refund approved with least possible submission of documents, which will ease the process of making refund claim.

Before going in to detail, let us understand the situations under which refunds would arise:

1. Excess payment of Tax due to mistake or Inadvertence

2. Export (Including deemed export) of goods/services under claim of rebate or refund of accumulated credit of tax when goods/service are exported

3. Refund of pre-deposit for filling appeal

4. Payment of Tax during investigation, but no or less liability arise at the time of finalization of investigation

5. Finalization of provisional assessment

6. Refund in case of supplies to CSD Canteens , Para military Forces

7. Refund in case output is exempted or non-gst supplies

8. Refund of Carry Forward ITC

9. Tax refund for International Tourist

10. Refund on account of year end or volume based incentive provided by supplier through credit notes

EXCESS PAYMENT OF TAX DUE TO MISTAKE OR INADVERTENCE

Excess payment may be on account of:

1. Wrong mention of nature of tax (CGST/SGST/IGST)

2. Wrong mention of GSTIN, or

3. Wrong mention of tax amount

In first two situations i.e. in case of wrong mention of nature of tax (CGST / SGST / IGST) or in case of wrong mention of GSTIN, the tax administration is required to verify and decide on the refund claim within specified time.

In the third situation i.e. where the amount has been mentioned wrongly, the refund of excess amount of tax, at the option of the taxpayer, would either be automatically carried forward for adjustment against future tax liabilities or be refunded on submission of application (return itself can be treated as a refund application) by the taxpayer.

The automatic carry forward would be allowed if the excess payment was made against a return and not against any other liability i.e. where excess tax has been paid due to difference of opinion between taxpayer and Authorities or on account of interpretation of notification, circular, etc.

GST Law may lay down the time limit within which the excess amount of tax, as reflected in the return filed by a taxpayer for that relevant period, can be re- credited suo moto and can be utilized by the taxpayer for payment of future tax liability.The refund may be on account of CGST, SGST or IGST as the case may be.

EXPORT (INCLUDING DEEMED EXPORT) Export Of Goods

1. Obtaining duty paid inputs and claiming refund of the same at the time of export of the finished goods without payment of duty.
2. Obtaining duty paid inputs, availing the input tax credit thereon and exporting finished goods after payment of duty (after utilizing such input tax credit) and thereafter claiming the rebate of the duty paid on exported goods.

In the GST regime, the exports are proposed to be zero rated. Although, the inputs for them would be tax paid which would be subsequently neutralized by way of refund.

The shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when:(a) the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export; and (b) the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be. Since the system of filing of return in FORM GSTR-3 has not started so far, the refund of integrated tax on export of goods would be granted based on FORM GSTR-1 and FORM GSTR-3B for the time being.

The details of the relevant export invoices contained in FORM GSTR-1 (or Table 6A thereof) shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India.

Rule 97A has been inserted in the CGST Rules, 2017 vide Notification no. 55/2017-Central Tax dated 15.11.2017 to enable manual processing of refund claims. The said rule provides that any reference to electronic filing of an application, intimation, reply, declaration, statement or electronic issuance of a notice, order or certificate on the common portal shall, in respect of that process or procedure, include manual filing of the said application, intimation, reply, declaration, statement or issuance of the said notice, order or certificate in such Forms as appended to CGST Rules, 2017. Circular no. 17/17/2017-GST dated 15.11.2017 and Circular no. 24/24/2017-GST dated 21.12.2017 has been issued clarifying the procedure for filing of manual refund claims. The circular mandates that due to the non-availability of the refund module on the common portal, it has been decided that the applications/documents/forms pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders.

FINALIZATION OF PROVISIONAL ASSESSMENT

* Return to be filed electronically and having a field indicating whether the tax being paid is provisional or final and in case of provisional, a drop box to be made available indicating the reasons for which the tax has been made on a provisional basis.

* If the AO agrees with the reason mentioned, the return may be kept provisional. Thereafter the return to be taken up for finalization within 90 days once the issue involved in provisional assessment is settled.

* At the time of finalization, a speaking order to be passed and to mention the amount the taxpayer is required to pay or eligible for refund.

* The refund would be granted only if the incidence of GST paid by him has not been passed on to the consumer.

* The principle of unjust enrichment to be applicable for refund. Taxpayer is required to submit a CA Certificate certifying the fact of non-passing of the GST burden by the taxpayer.

GST Law Drafting Committee may prescribe a threshold amount below which self certification (instead of CA Certificate) would be sufficient.

* The differential amount claimed as refund will be reflected in the return for the month in which the finalization takes place. ITC claimed by buyer to be reversed to the extent of refund granted to seller.

REFUND OF PRE-DEPOSIT INCLUDING REFUND ARISING IN PURSUANCE OF AN APPELLATE AUTHORITYS ORDER

* Taxpayer may file a simple refund application along with a CA Certificate certifying the fact of non-passing of the GST burden by the taxpayer

* Refund not to be kept in abeyance only on the ground of filing of appeal by the respondent unless the jurisdictional authority has obtained a stay of the order (in favour of the taxpayer) from higher appellate authority.

* GST Law may provide for certain predefined cooling period during which refund may not be granted which can be regarded as the mandatory waiting period for the outcome of the appeal / application for stay.

PAYMENT OF DUTY/ TAX DURING INVESTIGATION BUT NO/LESS LIABILITY ARISES AT THE TIME OF FINALISATION OF INVESTIGATION/ ADJUDICATION

* Taxpayer may file a simple refund application along with a CA Certificate certifying the fact of non-passing of the GST burden by the taxpayer.

* Refund may be withheld only if the department has obtained a stay order on the operation of the adjudication order.

REFUND OF CARRY FORWARD INPUT TAX CREDIT

ITC may accumulate on account of the following reasons :

1. Inverted Duty Structure i.e. GST on output supplies is less than the GST on the input supplies;
2. Stock accumulation;
3. Capital goods; and
4. Partial Reverse charge mechanism for certain services.

In case of accumulated ITC attributed to accumulation of stock or capital goods, refund of carried forward ITC may not be allowed and such amount would be carried forward to the next tax period (s).

In case of inverted duty structure, refund application, shall be filed for a tax period on a monthly basis in FORM GST RFD-01A. However, the registered persons having aggregate turnover of up to Rs. 1.5 crore in the preceding financial year or the current financial year and opting to file FORM GSTR-1 on quarterly basis (Notification no. 71/2017-Central Tax dated 29.12.2017 refers) shall apply for refund on a quarterly basis.

Further, it is stated that the refund claim for a tax period may be filed only after filing the details in FORM GSTR-1 for the said tax period. It is also to be ensured that a valid return in FORM GSTR3B has been filed for the last tax period before the one in which the refund application is being filed.

The registered persons applying for refund is required to give an undertaking to the effect that the amount of refund sanctioned would be paid back to the Government with interest 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, 2017 have not been complied with in respect

TAX REFUND FOR INTERNATIONAL TOURISTS

* Tax Refund for International Tourist (TRT) scheme provides an opportunity to the foreign tourists to purchase goods during their stay in any country on payment of GST and obtain refund of the GST so paid, at the time of exit from the country.

* Refund of the GST paid on retail purchase by the foreign tourists during their stay in India is allowed and the refund to be available at designated airports and ports only.

* A part of the eligible amount of refund will be deducted as handling fee for services rendered.

POWER WITH THE COMMISSIONER TO WITHHOLD REFUND IN CERTAIN CASES

GST law provides that where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to 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 may determine.

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CONCLUSION

GST Authority has simplified, time bound and technology driven refund procedure with minimal human interface between the taxpayer and tax authorities.

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