Manual filing and processing of refund claims in respect of zero-rated supplies

 

Circular No. 17/17/2017 – GST
F. No. 349/169/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing
New Delhi, Dated the 15th November, 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 in respect of zero-rated
supplies – reg.

Due to the non-availability of the refund module on the common portal, it has been decided by the competent authority, on the recommendations of the Council, that the applications/documents/forms pertaining to refund claims on account of zero-rated supplies shall be filed and processed manually till further orders. Therefore, in exercise of the powers conferred by sub-section (1) of section 168 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the CGST Act’) and for the purpose of ensuring uniformity, the following conditions and procedure are laid down for the manual filing and processing of the refund claims:

2.1 As per sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as ‘the IGST Act’) read with clause (i) of subsection (3) and sub-section (6) of section 54 of the CGST Act and rules 89 to 96A of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as ‘the CGST Rules’), a registered person may make zero-rated supplies of goods or services or both on payment of integrated tax and claim refund of the tax so paid, or make zero-rated supplies of goods or services or both under bond or Letter of Undertaking without payment of integrated tax and claim refund of unutilized input tax credit in relation to such zero rated supplies.

2.2 The refund of integrated tax paid on goods exported out of India is governed by rule 96 of the CGST Rules. The shipping bill filed by an exporter shall be deemed to be an application for refund in such cases. The application shall be deemed to have been filed only when export manifest or export report is filed and the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be. Upon receipt of the information regarding furnishing of a valid return in FORM GSTR-3 or FORM GSTR-3B, as the case may be, from the common portal, the system designated by the Customs shall process the claim for refund and an amount equal to the integrated tax paid in respect of such export shall be electronically credited to the bank account of the applicant. Any order regarding withholding of such refund or its further sanction respectively in PART-B of FORM GST RFD-07 or FORM GST RFD-06 shall be done manually till the refund module is operational on the common portal.

2.3 The application for refund of integrated tax paid on zero-rated supply of goods to a Special Economic Zone developer or a Special Economic Zone unit or in case of zero-rated supply of services (that is, except the cases covered in paragraph 2.2 above and para 2.4 below) is required to be filed in FORM GST RFD-01A (as notified in the CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) by the
supplier on the common portal and a print out of the said form shall be submitted before the jurisdictional proper officer along with all necessary documentary evidences as applicable (as per the details in statement 2 or 4 of Annexure to FORM GST RFD – 01), within the time stipulated for filing of such refund under the CGST Act.

2.4 The application for refund of unutilized input tax credit on inputs or input services used in making such zero-rated supplies shall be filed in FORM GST RFD- 01A on the common portal and the amount claimed as refund shall get debited in accordance with sub-rule (3) of rule 86 of the CGST Rules from the amount in the electronic credit ledger to the extent of the claim. The common portal shall generate a proof of debit (ARN- Acknowledgement Receipt Number) which would be mentioned in the FORM GST RFD-01A submitted manually, along with the print out of FORM GST RFD-01A to the jurisdictional proper officer, and with all necessary documentary evidences as applicable (as per details in statement 3 or 5 of Annexure to FORM GST RFD-01), within the time stipulated for filing of such refund under the
CGST Act.

2.5 The registered person needs to file the refund claim with the jurisdictional tax authority to which the taxpayer has been assigned as per the administrative order issued in this regard by the Chief Commissioner of Central Tax and the Commissioner  of State Tax. In case such an order has not been issued in the State, the registered person is at liberty to apply for refund before the Central Tax Authority or State Tax Authority till the administrative mechanism for assigning of taxpayers to respective authority is implemented. However, in the latter case, an undertaking is required to be submitted stating that the claim for sanction of refund has been made to only one of the authorities. It is reiterated that the Central Tax officers shall facilitate the processing of the refund claims of all registered persons whether or not such person was registered with the Central Government in the earlier regime.

2.6 Once such a refund application in FORM GST RFD-01A is received in the office of the jurisdictional proper officer, an entry shall be made in a refund register to be maintained for this purpose with the following details –

Table 1

Sl. No
.
Applicant’ s name GSTI N Date       of receipt   of applicatio n Period to which the claim pertain s Nature     of
refund       –
Refund    of integrated tax paid/Refun d               of
unutilized
ITC
Amoun t         of
refund claime d
Date of issue of acknowledgme nt    in    FORM GST RFD-02 Date       of receipt   of complete applicatio n           (as
mentioned in  FORM GST
RFD-02)
1 2 3 4 5 6 7 8 9

2.7 Further, all communication in regard to the FORMS mentioned below shall be done manually, within the timelines as specified in the relevant rules, till the module is operational on the common portal, and all such communications shall also be recorded appropriately in the refund register as discussed in the succeeding paragraphs –

Sl.No. FORM Details Relevant provision      of the         CGST Rules, 2017
1. FORM GST RFD-02 Acknowledgement Rules       90(1)
and 90(2)
2. FORM GST RFD-03 Deficiency memo Rule 90(3)
3. FORM GST RFD-04 Provisional refund order Rule 91(2)
4. FORM GST RFD-05 Payment advice Rules      91(3),
92(4),       92(5)
and 94
5. FORM GST RFD-06 Refund         sanction/Rejection order Rules      92(1),
92(3),      92(4),
92(5) and 96(7)
6. FORM GST RFD-07 Order           for           complete adjustment/withholding         of sanctioned refund Rules      92(1),
92(2) and 96(6)
7. FORM GST RFD-08 Notice      for      rejection      of application for refund Rule 92(3)
8. FORM GST RFD-09 Reply to show cause notice Rule 92(3)

2.8 The processing of the claim till the provisional sanction of refund shall be recorded in the refund register as in the table indicated below –

Table 2

Date      of
issue      of Deficiency Memo    in FORM GST
RFD-03
Date     of receipt  of    reply from  the applicant Date    of    issue    of provisional    refund order     in     FORM GST-RFD-04 Amount of refund claimed Amount      of      provisional refund sanctioned Date  of  issue  of Payment Advice in  FORM  GST RFD-05
CT ST/UTT IT Cess
1 2 3 4 5 6 7 8 9

2.9 After the sanction of provisional refund, the claim shall be processed and the final order issued within sixty days of the date of receipt of the complete application form. The process shall be recorded in the refund register as in the table indicated below –
Table 3

Date of issue of notice, if any for rejection  of refund in FORM GST RFD- 08 Date of recei pt   of reply, if any to SCN
in FORM GST RFD- 09
Date of  issue of  Refund sanction/rejec tion   order   in FORM     GST RFD-06 Total amount of refund sanctioned Date of issue of Payme nt Advice in FORM GST RFD- 05 Amount  of   refund rejected Date   of issue   of order for adjustm ent      of sanction ed refund/ withhol ding refund
in FORM GST RFD-07
C T ST/UT T I T Cess C T ST/UT T IT Ces s
1 2 3 4 5 6 7 8 9 10 11 12 13

 

2.10 After the refund claim is processed in accordance with the provisions of the CGST Act and the rules made thereunder and where any amount claimed as refund is rejected under 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 GST PMT-03. The amount would be credited by the proper officer using FORM GST RFD-01B (as notified in the CGST Rules vide notification No. 55/2017 – Central Tax dated 15.11.2017) subject to the provisions of rule 93 of the CGST Rules.

3. For the sake of clarity and uniformity, the entire process of filing and processing of refunds manually is tabulated as below:

3.1 Filing of Refund Claims:

Sl.
No.
Category of Refund Process of Filing
1. Refund of IGST paid on export of goods No separate application is required as   shipping   bill   itself   will   be treated as application for refund.
2. Refund of IGST paid on export of services
/ zero rated supplies to SEZ units  or SEZ developers
Printout  of  FORM  GST  RFD- 01A  needs  to  be  filed  manually with the jurisdictional GST officer (only  at   one   place   –   Centre   or State)      along      with      relevant documentary  evidences,  wherever applicable.
3. Refund of unutilized input tax credit due to the  accumulation  of  credit  of  tax  paid  on inputs  or  input  services  used  in  making zero-rated supplies of goods or services or both FORM  GST  RFD-01A  needs  to be  filed  on  the  common  portal. The  amount  of  credit  claimed  as refund  would  be    debited  in  the electronic  credit  ledger  and  proof of  debit needs  to be  generated on the common portal. Printout of the FORM GST RFD- 01A needs to be       submitted       before       the jurisdictional   GST   officer   along with      necessary      documentary
evidences, wherever applicable.

 

3.2 Steps to be followed for processing of Refund Claims:

Three different refund registers are to be maintained for record keeping of the manually sanctioned refunds – for receipts, sanction of provisional refunds and sanction of final refunds. The steps are as follows:

Step No. Action to be Taken
Step-1 Entry to be made in the Refund register for receipt of refund applications
Step-2 Check  for  completeness  of  application  as  well  as  availability  of  the supporting  documents  in  totality.  Once  completeness  in  all  respects  is ascertained,  acknowledgement  in  FORM  GST  RFD-02  shall  be  issued within 15 days from the date of filing of the application and  entry shall be
made in the Refund register for receipt of refund applications
Step-3 ·    All  communications  (issuance  of  deficiency  memo,  issuance  of provisional  and  final  refund  orders,  payment  advice  etc.)  shall  be done in the format prescribed in the Forms appended to the CGST Rules, and shall be done manually (i.e. not on the common portal) within the timelines prescribed in the rules;
·    Processing for grant of provisional refund shall be completed within 7 days as per the CGST Rules and details to be maintained in the register  for  provisional  refunds.  Bifurcation  of  the  taxes  to  be refunded under CGST (CT) /SGST (ST) /UTGST (UT) /IGST (IT)
/Cess shall be maintained in the register mandatorily;
·    After  the  sanction  of  the  provisional  refund,  final  order  is  to  be issued within sixty days (after due verification of the documentary evidences) of the date of receipt of the complete application form. The details of the finally sanctioned refund and rejected portion of the refund along with the breakup (CT / ST / UT / IT/ Cess) to be maintained in the final refund register;
·    The  amount  not  sanctioned  and  eligible  for  re-credit  is  to  be  re- credited to the electronic credit ledger by an order made in FORM GST PMT-03. The actual credit of this amount will be done by the
proper officer in FORM GST RFD-01B.

 

3.3 Detailed procedure for manual processing of refund claims:

The detailed procedure for disposal of Refund claims filed manually is as under:

MANUAL PROCESSING OF REFUND
STEPS REMARKS LEGAL PROVISIONS
Filing  of  refund  application in  FORM  GST  RFD-  01A
online on the common portal (only      when      refund      of unutilized ITC is claimed)
·    The           corresponding electronic   credit   ledger of  CT  /  ST  /  UT  /  IT/ Cess  would  get  debited and   an   ARN   number would get generated. Rule 89
·    The printout of the ARN along with application of refund         shall         be submitted   manually   in the                 appropriate jurisdiction.
·    This  form  needs  to  be accompanied    with    the requisite     documentary evidences.    This    Form shall   contain   the   debit entry   in   the   electronic credit    ledger    of    the amount      claimed      as refund  in  FORM  GST
RFD-01A.
Rule       89(1)       – Application
Filing      of      printout      of
FORMGST RFD-01A
Rule       89(2)       – Requisite Documents
Rule       89(3)       –
Debiting                of
electronic        credit ledger
·    The  proper  officer  shall validate     the     GSTIN details  on  the  portal  to validate   whether   return in  FORM  GSTR-3  or FORM  GSTR-  3B,  as the   case   may   be,   has been filed. A declaration is      required      to      be submitted        by        the claimant  that  no  refund has been claimed against the relevant invoices.
·    Deficiencies,  if  any,  in documentary   evidences are to be ascertained and
communicated              in FORM   GST   RFD-03
within  15  days  of  filing of           the           refund application.
·    Deficiency            Memo should   be   complete   in all respects and only one Deficiency  Memo  shall be given.
·    Submission                  of
application               after Deficiency  Memo  shall be   treated   as   a   fresh application.
·    Resubmission     of     the application,              after
rectifying                    the deficiencies  pointed  out in the Deficiency memo, shall  be  made  by  using the ARN and debit entry number            generated originally.
·    If  the  application  is  not filed afresh within  thirty days            of            the communication    of    the deficiency    memo,    the proper  officer  shall  pass an order in FORM GST PMT-03   and   re-credit the  amount  claimed  as refund   through   FORM GST RFD-01B.
Rule 90(2) – 15 day time for scrutiny
Rule       90(3)       –
Issuance                of Deficiency memo
Initial      scrutiny      of      the Documents   by   the   proper officer Rule  90(3)  –  Fresh refund     application requirement
Rule    93(1)    –    re- credit     of     refund amount applied for
Issue           acknowledgement manually  within  15  days  in FORM GST RFD-02 ·    The  date  of  submission of  application  for  which acknowledgement      has been     given     will     be considered   as   the   date for ensuring whether the refund   application   has been   sanctioned   within the      stipulated      time period. Rule        90(2)        – Acknowledgement
Grant  of  provisional  refund within seven days of issue of acknowledgement ·    The         amount         of provisional  refund  shall be calculated taking into account   the  total  input tax      credit,      without making    any    reduction for         credit         being provisionally accepted.
·    Provisional  refund  shall be granted separately for each head CT / ST / UT
/ IT/ Cess within 7 days of  acknowledgement  in FORM GST RFD-04.
·    Before   sanction   of   the refund     a     declaration shall be obtained that the applicant        has        not contravened rule 91(1).
·    Payment   advice   to   be issued  in  FORM  GST RFD-05.
·    Refund  would  be  made directly    in    the    bank account    mentioned    in
the registration.
Rule       91(1)       – Requirement   of   no prosecution  for  last 5 years
Rule  91(2)  –  Prima facie      satisfaction, seven                  day
requirement
Rule       91(3)       – Payment        advice, electronic   credit   to bank account
Detailed    scrutiny    of    the refund application along with submitted documents ·    The officer shall validate refund  statement  details with  details  in  FORM GSTR 1 (or Table 6A of FORM            GSTR-1)
available        on        the common portal.
·    The Shipping bill details shall    be    checked    by officer                 through ICEGATE               SITE (www.icegate.gov.in) wherein      the      officer would  be  able  to  check details    of    EGM    and shipping  bill  by  keying in  port  name,  Shipping bill number and date.
·    Further,  details  of  IGST paid   also   needs   to   be verified    from    FORM GSTR-   3   or   FORM
GSTR-  3B,  as  the  case may   be,   filed   by   the applicant and it needs to be    verified    that    the refund   amount   claimed shall be less than the tax paid  on  account  of  zero rated    supplies    as    per FORM     GSTR-3     or FORM  GSTR-  3B,  as
the case may be.
·    Ascertain   what   amount may      be      sanctioned finally  and  see  whether any  adjustments  against any  outstanding  liability is     required     (FORM GST RFD-07 – Part A).
·    Ascertain   what   amount of the input tax credit is sanction-able,            and amount of refund, if any, liable to be withheld.
·    Order needs to be passed in FORM GST RFD-07
– Part B.
Rule 89(4) – Refund Amount Calculation
Rule   92(1)   –   Any adjustments made in the  amount  against existing demands
Rule       92(2)       –
reasons                 for
withholding          of refunds
If the sanction-able amount is less than the applied amount ·    Notice  has  to  be  issued to     the     applicant     in FORM GST RFD-08.
·    The    applicant    has    to reply  within  15  days  of receipt  of  the  notice  in FORM GST RFD-09.
·    Principles     of     natural justice   to   be   followed before  making  the  final decision.
·    Final  order  to  be  made
in  FORM  GST  RFD- 06.
Rule 92(3) – Notice for      refund      not admissible / payable
Rule       92(3)       –
Requirement         of reply  to  the  notice within 15 days
Rule   92(3),   92(4),
92(5)  –  Sanction  of Refund order
Pre-Audit ·    Pre-audit         of         the manually         processed refund    applications    is not     required     to     be carried  out, irrespective of  the  amount  involved, till     separate     detailed guidelines are issued.
·    Post-audit  of  the  orders may   however   continue on   the   basis   of   extant
guidelines.
Final sanction of refund ·    The  proper  officer  shall issue   the   refund   order manually  for  each  head
i.e.  CT  /  ST  /  UT  /  IT/ Cess.
·    Amount                    paid provisionally needs to be adjusted accordingly.
·    Payment  advice  is  to  be made   in   FORM   GST RFD-05.
·    The   amount   of   credit rejected   has   to   be   re- credited   to   the   credit ledger   by   an   order   in FORM  GST  PMT-  03 and shall be intimated to the   common   portal   in FORM     GST     RFD- 01B.
·    Refund,  if  any,  will  be paid  by  an  order   with payment      advice      in FORM GST RFD-05.
·    The details of the refund along     with     taxpayer bank     account     details shall       be       manually submitted                     in
PFMS/[States’]    system by     the     jurisdictional Division’s  DDO  and  a signed     copy    of     the sanction  order  shall  be
sent  to  PAO  office  for release of payment.
Rule   92(3),   92(4),
92(5)  –  Sanction  of Refund order
Rule  92(4),  92(5)  –
Payment         advice issue
Payment of interest if any ·    Amount,  if  any,  will  be paid  by  an  order   with payment       advice       in
FORM GST RFD-05.
Rule 94

4. The refund application for various taxes i.e. CT / ST / UT / IT/ Cess can be filed with any one of the tax authorities and shall be processed by the said authority, however the payment of the sanctioned refund amount shall be made only by the respective tax authority of the Centre or State government. In other words, the payment of the sanctioned refund amount in relation to CT / IT / Cess shall be made by the Central tax authority while payment of the sanctioned refund amount in relation to ST / UT would be made by the State tax/Union territory tax authority. It therefore becomes necessary that the refund order issued either by the Central tax authority or the State tax/UT tax authority is communicated to the concerned counter-part tax authority within three days for the purpose of payment of the relevant sanctioned refund amount of tax or cess, as the case may be.

5. It is requested that suitable trade notices may be issued to publicize the
contents of this Circular.

6. Difficulty, if any, in implementation of the above instructions may please be
brought to the notice of the Board. Hindi version would follow.

(Upender Gupta)
Commissioner (GST)

Download PDF here –Circular No. 17-GST

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