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Sl. No. |
Issue |
Clarification |
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1. |
Certain registered persons have reversed, through return in FORM GSTR-3B filed for the month of August, 2018 or for a subsequent month, the accumulated input tax credit (ITC) required to be lapsedin terms of notification No. 20/2018-Central Tax (Rate) dated 26.07.2018read with circular No. 56/30/2018-GST dated24.08.2018(hereinafter referred to as the “said notification”). Some of these registered persons, who have attempted to claim refund of accumulated ITCon account of inverted tax structurefor the same period in which the ITC required to be lapsed in terms of the said notification has been reversed, are not able to claim refund of accumulated ITC to the extent to which they are so eligible. This is because of a validation check on the common portal which prevents the value of input tax credit in Statement 1A of FORM GST RFD-01Afrom being higher than the amountof ITC availed in FORM GSTR-3Bof the relevant period minus the value of ITC reversed in the same period. This results in registered persons being unable to claim the full amount of refund of accumulated ITC on account of inverted tax structure to which they might be otherwise eligible. What is the solution to this problem? |
a) As a one-timemeasure to resolve this issue, refundof accumulatedITCon account of inverted tax structure, for theperiod(s)in which there isreversal of theITCrequired to be lapsed in terms of the said notification,isto be claimed under the category “any other” instead of under the category “refund of unutilized ITC on account of accumulation due to inverted tax structure” in FORM GST RFD-01A. It is emphasized that this application for refund should relate to the sametax period in which such reversal has been made.
b) The application shall be accompanied by all statements, declarations, undertakings and other documents which are statutorily required to be submitted with a “refund claim of unutilizedITC on accountofaccumulation due to inverted tax structure”. On receiving the said application,the proper officer shall himself calculate the refund amount admissible as perrule 89(5) of Central Goods and Services Tax Rules, 2017 (hereinafter referred toas “CGST Rules”),in the manner detailed inpara 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 theproper officer is satisfied that the whole or any part of the amount claimed is payable as refund, he shallrequest the taxpayer, in writing, to debit the said amount fromhis 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-06and the payment advice in FORMGST RFD-05.
c) All refund applicationsfor unutilized ITC on account of accumulation due to inverted tax structurefor subsequent tax period(s)shall be filed in FORM GST RFD-01Aunder the category “refund of unutilized ITC on account of accumulation due to inverted tax structure”. |
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2. |
The clarificationat Sl. No. 1 aboveapplies to registered persons who have already reversed the ITC required to be lapsed in terms of the said notification through return in FORM GSTR-3B. What about those registered persons who are yet to perform this reversal ? |
It is hereby clarified that all those registered persons required to make the reversal in terms of the said notification and who have not yet done so,may reverse the said amount through FORM GST DRC-03 instead of through FORM GSTR-3B. |
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3. |
What shall be the consequence if any registeredperson reverses the amount of credit to be lapsed, in terms the said notification,throughthe returnin FORM GSTR-3Bfor any month subsequent to August, 2018 or through FORM GST DRC-03subsequent to the due date of filing of the return in FORM GSTR-3Bfor the month of August, 2018 ? |
a) As the registered person has reversed the amount of credit to be lapsed in the returnin FORM GSTR-3Bfor a month subsequent to themonth of August, 2018or through FORM GST DRC-03subsequent to the due date of filing of the return in FORM GSTR-3Bfor the month of August, 2018, he shall be liable to pay interest under sub-section (1) of section 50of the CGST Act on the amount which has beenreversed belatedly. Such interest shall be calculated startingfrom the due date of filing of return in FORM GSTR-3B for the month of August, 2018 till the date of reversal of said amountthrough FORM GSTR-3Bor through FORM GST DRC-03, as the case may be.
b) The registered personwho has reversed the amount of credit to be lapsedin the return in FORM GSTR-3Bfor any month subsequent to August, 2018or through FORM GST DRC-03subsequent to the due date of filing of the return in FORM GSTR-3Bfor the month of August, 2018 would remaineligible 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-3Bor FORMGST DRC-03, along with payment of interest,as applicable. |
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4. |
How should a merchant exporter claim refund of input tax credit availed on supplies received on which the supplier has availed the benefit of the Government of India, Ministry of Finance, notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321(E), dated the 23rd October, 2017(hereinafter referred to as the “said notifications”) ? |
a) Rule 89(4B) of the CGST Rules provides that where the person claiming refund of unutilizedinput tax credit on account of zero-ratedsupplies without payment of taxhas received supplies on which the supplier has availed the benefit of the said notifications, the refund of input tax credit, availed in respect of such inputs received under the said notifications for export of goods, shall be granted.
b) This refund of accumulated ITC under rule 89(4B) of the CGST Rules shall be appliedunder the category “any other” instead of under the category “refund of unutilized ITC on account of exports without payment of tax” in FORM GST RFD-01Aand shall be accompanied by all supporting documents required for substantiating the refund claimunder the category “refund of unutilized ITC on account of exports without payment of tax”. After scrutinizing the application for completeness and eligibility, if theproper 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-06and the payment advice in FORM GST RFD-05. |
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5. |
Vide Circular No. 59/33/2018-GST dated 04.09.2018, it was clarified that after issuance of a deficiency memo, the input tax credit is required to be re-credited through FORM GST RFD-01 Band the taxpayer is expected to file a fresh application for refund. Accordingly, in several cases, the ITCamounts were re-credited after issuance of deficiency memo. However, it was later represented that the common portal does not allow a taxpayer to file a fresh application for the same period after issuance of a deficiency memo. Therefore, the matter was re-examined and it was subsequently clarified, vide Circular No. 70/44/2018-GST dated 26.10.2018 that no re-credit should be carried out in such cases and taxpayers should file the rectified application, after issuance of the deficiency memo, under the earlier ARN only. It was 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. |
In such cases, the claimant may re-submit the refund application manually in FORMGST RFD-01Aafter correction of deficienciespointed out in the deficiency memo, using the same ARN. The proper officer shall then proceed to process the refund application as per the existing guidelines. After scrutinizing the application for completeness and eligibility, if theproper officer is satisfied that the whole or any partof 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 officer, he shall proceed to issue the refund order in FORM GST RFD-06and the payment advice in FORM GST RFD-05. |