GST rules changed on refund claims

The finance ministry has decided that applications/documents/forms pertaining to refund claims on account of certain zero-rated supplies shall be filed and processed manually till further orders. Last Wednesday, notification 55//2017–Central Tax was issued, amending the Central Goods and Services Tax (CGST) Rules and prescribing new refund application form RFD-01A. Simultaneously, the Central Board of Excise and Customs (CBEC) prescribed the procedures through Circular 17/17/17/2017-GST. 

For refund of Integrated GST (IGST) paid on export of goods, the present procedure for disbursement through  Customs remains unchanged. For refund of IGST paid on export of services or supplies to Special Economic Zone (SEZ) developers or units, RFD-01A must be filed by the supplier on the common portal. Then, a printout of the form should be given to the jurisdictional tax officer, with the necessary documentary evidence.  

For refund of unutilised input tax credit on account of zero-rated supplies under bond or letter of undertaking without payment of IGST, RFD-01A must be filed by the supplier on the common portal. First, the amount claimed as refund will get debited from the amount in the electronic credit ledger to the extent of the claim and an acknowledgement receipt number (ARN) generated. The claimant should then incorporate the ARN in the hard copy of the RFD-01A and send the application to the jurisdictional tax officer, with all prescribed documents. 

Within seven days of the receipt of a completed application, the officer must grant provisional refund of 90 per cent of the claim. The balance amount should be disbursed within 60 days of the claim, after due processing. All the communications in regard to the claims, such as acknowledgement, deficiency memo, provisional refund order, payment advice, refund sanction or rejection order, order for complete adjustment or withholding of sanctioned refund, notice of rejection of claim, reply to showcause notice, etc, should be done manually. Within the timelines as specified in the relevant Rules, till the refund module is operational on the common portal. If any claim is rejected fully or partially, the amount debited, to the extent of rejection, should be re-credited to the electronic credit ledger of the claimant.

Where a tax payer has not been assigned to any tax authority, the refund application may be filed either before the central or state tax authority, till the administrative mechanism for assigning of taxpayers to the respective authority is implemented. In which case, an undertaking is to be given that the claim for sanction of refund has been made to only one of these. 

Any central or state authority may process the application and sanction the refund but the payment is to be made only by the respective one. That is, CGST can be disbursed only by a central tax authority and State GST only by a state one. The refund order issued by either is to be communicated to the counterpart concerned within three days for the purpose of payment of the relevant sanctioned refund amount, says CBEC. This means the exporter must wait longer and follow up with central and state authorities. We now have to wait and see how this new system works. 

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