On September 4, 2018, the said Rule 96 (10) was again amended retrospectively with effect from October 23, 2017. This was done to deny refunds not only in cases where the supplier had availed of certain exemptions or refunds but also where the exporter had imported his inputs or capital goods by availing of IGST exemption under certain notifications.
Now, the same Rule 96 (10) has been again amended (through notification number 53, dated October 9, 2018), with retrospective effect from October 23, 2017, restoring the position just prior to the amendment made on September 4, 2018.
The net effect of the latest amendment is that the facility of claiming a refund of IGST on export goods has been brought back for Export Oriented Units and for holders of advance authorisation or Export Promotion Capital Goods authorisation who had imported their inputs and/or capital goods without IGST payment. However, the restriction on claiming such refunds, on the grounds that the supplier to the exporter had claimed certain exemptions or refunds, continues.
Consequently, a clarification from the Central Board of Indirect Taxes and Customs through circular 45/19/2018-GST, dated May 30, 2018, now holds good. It says the said restriction is not applicable where an exporter has procured goods from suppliers who have not availed of the benefits of specified notifications for making their outward supplies. Or to an exporter who has procured goods from suppliers who have, in turn, received goods from persons availing of the benefits of specified notifications or to supply of goods manufactured from capital goods imported without IGST payment.
This circular and the said notification number 53 are confusingly worded and deserve a review. The prospective notification number 54, dated October 9, 2018, has two parts. The first one amends Rule 89 (4B) of the said CGST Rules, dealing with refund of unutilised credit on account of export without IGST payment. It essentially redrafts the provisions to bring greater precision and clarity. The second part, dealing with the said Rule 96 (10), aims to prevent an exporter importing inputs without payment of IGST or receiving inputs from suppliers availing of exemptions or refunds under specified notifications without payment of tax or at a reduced rate of tax from claiming refund of IGST on export goods.
The idea is to ensure the exporter does not utilise the input tax credit availed on other inputs or input services or capital goods for making payment of IGST on export goods under refund claim. In other words, from October 9 onwards, any export goods procured without GST payment or manufactured from inputs procured/imported without GST payment must be exported without IGST payment.