SECTION 16 OF THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017, READ WITH SECTION 54 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 AND RULES 89 TO 96A OF THE CENTRAL GOODS AND SERVICES TAX RULES, 2017 – ZERO RATED SUPPLY – CONDITIONS AND PROCEDURE LAID DOWN FOR 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], DATED 15-11-2017
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 sub-section (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 —
|Sl. No.||Applicant’s name||GSTIN||Date of receipt of application||Period to which the claim pertain s||Nature of refund – Refund of integrated tax paid/Refund of unutilized ITC||Amount of Refund claimed||Date of issue of acknowledgement in FORM GST RFD-02||Date of receipt of complete application (as mentioned in FORM GST RFD-02)|
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||Rule 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 —
|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|
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 —
|Date of issue of notice, if any for rejection of refund in FORM GST RFD- 08||Date of receipt of reply, if any to SCN in FOR M GST RFD- 09||Date of issue of Refund sanction/rejection order in FORM GST RFD-06||Total amount of refund sanctioned||Date of issue of Payment Advice in FORM GST RFD- 05||Amount of refund rejected||Date of issue of order for adjustment of sanctioned refund/withholding refund in FORM GST RFD-07|
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|
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|
|Filing of refund application in FORM GST RFD- 01A online on the common portal (only when refund of unutilized ITC is claimed)||
|Filing of printout of FORM GST RFD-01A||
|Rule 89(1) – Application
Rule 89(2) – Requisite Documents
Rule 89(3) – Debiting of electronic credit ledger
|Initial scrutiny of the Documents by the proper officer||
|Rule 90(2) – 15 day time for scrutiny
Rule 90(3) – Issuance of Deficiency memo
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
Grant of provisional refund within seven days of issue of acknowledgement
Rule 90(2) – Acknowledgement
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||
|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||
|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
|Final sanction of refund||
|Rule 92(3), 92(4), 92(5) – Sanction of Refund order
Rule 92(4), 92(5) – Payment advice issue
|Payment of interest if any||
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.