Circular No. 94/13/2019-GST [C10-38N]

Various representations have been received seeking clarifications on certain issues relating to refund. In order to clarify these issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues as detailed hereunder:

Sl. Issue Clarification No.

1. Certain registered persons have reversed, a) As a one-time measure to resolve this through return in FORM GSTR-3B filed issue, refund of accumulated ITC on for the month of August, 2018 or for a account of inverted tax structure, for subsequent month, the accumulated input the period(s) in which there is tax credit (ITC) required to be lapsed in reversal of the ITC required to be terms of notification No. 20/2018- lapsed in terms of the said Central Tax (Rate) dated 26.07.2018 notification, is to be claimed under read with circular No. 56/30/2018-GST the category “any other” instead of dated 24.08.2018 (hereinafter referred to under the category “refund of as the “said notification”). Some of these unutilized ITC on account of registered persons, who have attempted accumulation due to inverted tax to claim refund of accumulated ITC on structure” in FORM GST RFD-01A. account of inverted tax structure for the It is emphasized that this application same period in which the ITC required to for refund should relate to the same be lapsed in terms of the said notification tax period in which such reversal has

Circular No. 94/13/2019-GST

has been reversed, are not able to claim been made. refund of accumulated ITC to the extent b) The application shall be accompanied to which they are so eligible. This is by all statements, declarations, because of a validation check on the undertakings and other documents common portal which prevents the value which are statutorily required to be of input tax credit in Statement 1A of submitted with a “refund claim of FORM GST RFD-01Afrom being unutilized ITC on account of higher than the amount of ITC availed in accumulation due to inverted tax FORM GSTR-3B of the relevant period structure”. On receiving the said minus the value of ITC reversed in the application, the proper officer shall same period. This results in registered himself calculate the refund amount persons being unable to claim the full admissible as per rule 89(5) of amount of refund of accumulated ITC on Central Goods and Services Tax account of inverted tax structure to Rules, 2017 (hereinafter referred to as which they might be otherwise eligible. “CGST Rules”), in the manner What is the solution to this problem? detailed in para 3 of Circular No. 59/33/2018-GST dated 04.09.2018. After calculating the admissible refund amount, as described above, and scrutinizing the application for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable as refund, he shall request the taxpayer, in writing, to debit the said amount from his electronic credit ledger through FORM GST DRC-03. Once the proof of such debit is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD-06 and the payment advice in FORM GST RFD-05. c) All refund applications for unutilized ITC on account of accumulation due to inverted tax structure for subsequent tax period(s) shall be filed in FORM GST RFD-01A under the category “refund of unutilized ITC on account of accumulation due to inverted tax structure”.

2. The clarification at Sl. No. 1 above applies It is hereby clarified that all those to registered persons who have already registered persons required to make the

Circular No. 94/13/2019-GST

reversed the ITC required to be lapsed in reversal in terms of the said notification terms of the said notification through and who have not yet done so, may return in FORM GSTR-3B. What about reverse the said amount through FORM those registered persons who are yet to GST DRC-03 instead of through FORM perform this reversal? GSTR-3B.

3. What shall be the consequence if any a) As the registered person has reversed registered person reverses the amount of the amount of credit to be lapsed in credit to be lapsed, in terms the said the return in FORM GSTR-3B for notification, through the return in FORM a month subsequent to the month of GSTR-3B for any month subsequent to August, 2018 or through FORM August, 2018 or through FORM GST GST DRC-03 subsequent to the due DRC-03 subsequent to the due date of date of filing of the return in FORM filing of the return in FORM GSTR-3B GSTR-3B for the month of August, for the month of August, 2018? 2018, he shall be liable to pay interest under sub-section (1) of section 50 of the CGST Act on the amount which has been reversed belatedly. Such interest shall be calculated starting from the due date of filing of return in FORM GSTR- 3B for the month of August, 2018 till the date of reversal of said amount through FORM GSTR-3B or through FORM GST DRC-03, as the case may be. b) The registered person who has reversed the amount of credit to be lapsed in the return in FORM GSTR-3B for any month subsequent to August, 2018 or through FORM GST DRC-03 subsequent to the due date of filing of the return in FORM GSTR-3B for the month of August, 2018 would remain eligible to claim refund of unutilized ITC on account of accumulation due to inverted tax structure w.e.f. 01.08.2018. However, such refund shall be granted only after the reversal of the amount of credit to be lapsed, either through FORM GSTR-3B or FORM GST DRC-03, along with payment of interest, as applicable.

Circular No. 94/13/2019-GST

4. How should a merchant exporter claim a) Rule 89(4B) of the CGST Rules refund of input tax credit availed on provides that where the person supplies received on which the supplier has claiming refund of unutilized input availed the benefit of the Government of tax credit on account of zero-rated India, Ministry of Finance, notification No. supplies without payment of tax has 40/2017-Central Tax (Rate), dated the 23rd received supplies on which the October, 2017, published in the Gazette of supplier has availed the benefit of India, Extraordinary, Part II, Section 3, the said notifications, the refund of Sub-section (i), vide number G.S.R 1320 input tax credit, availed in respect (E), dated the 23rd October, 2017 or of such inputs received under the notification No. 41/2017-Integrated Tax said notifications for export of (Rate), dated the 23rd October, 2017, goods, shall be granted. published in the Gazette of India, b) This refund of accumulated ITC Extraordinary, Part II, Section 3, Sub- under rule 89(4B) of the CGST section (i), vide number G.S.R 1321(E), Rules shall be applied under the dated the 23rd October, 2017 (hereinafter category “any other” instead of under referred to as the “said notifications”)? the category “refund of unutilized ITC on account of exports without payment of tax” in FORM GST RFD-01A and shall be accompanied by all supporting documents required for substantiating the refund claim under the category “refund of unutilized ITC on account of exports without payment of tax”. After scrutinizing the application for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable as refund, he shall request the taxpayer, in writing, to debit the said amount from his electronic credit ledger through FORM GST DRC-03. Once the proof of such debit is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD-06 and the payment advice in FORM GST RFD-05.

5. Vide Circular No. 59/33/2018-GST dated In such cases, the claimant may re- 04.09.2018, it was clarified that after submit the refund application manually issuance of a deficiency memo, the input in FORM GST RFD-01A after tax credit is required to be re-credited correction of deficiencies pointed out in

Circular No. 94/13/2019-GST

through FORM GST RFD-01B and the the deficiency memo, using the same taxpayer is expected to file a fresh ARN. The proper officer shall then application for refund. Accordingly, in proceed to process the refund application several cases, the ITC amounts were re- as per the existing guidelines. After credited after issuance of deficiency scrutinizing the application for memo. However, it was later represented completeness and eligibility, if the that the common portal does not allow a proper officer is satisfied that the whole taxpayer to file a fresh application for the or any part of the amount claimed is same period after issuance of a deficiency payable as refund, he shall request the memo. Therefore, the matter was re- taxpayer, in writing, to debit the said examined and it was subsequently amount from his electronic credit ledger clarified, vide Circular No. 70/44/2018- through FORM GST DRC-03. Once the GST dated 26.10.2018 that no re-credit proof of such debit is received by the should be carried out in such cases and officer, he shall proceed to issue the taxpayers should file the rectified refund order in FORM GST RFD-06 application, after issuance of the deficiency and the payment advice in FORM GST memo, under the earlier ARN only. It was RFD-05. also further clarified that a suitable clarification would be issued separately for cases in which such re-credit has already been carried out. However, no such clarification has yet been issued and several refund claims are pending on this account.

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

3. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.