Circular No.24/24/2017-GST

F. No. 349/58/2017-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Excise and Customs
GST Policy Wing

New Delhi, dated the 21stDecember, 2017

To,    

    The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
    Commissioners of Central Tax (All)
    The Principal Director Generals / Director Generals (All)

Madam/Sir,

Sub – Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger- Reg.

    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 inverted duty structure (including supplies in terms of notification Nos. 40/2017-Central Tax (Rate) and 41/2017-Integrated Tax (Rate) both dated 23.10.2017), deemed exports and excess balance in electronic cash ledger shall be filed and processed manually till further orders. In this regard, the Board, in exercise of its powers conferred under section 168 (1) of the Central Goods and  Services Tax Act, 2017 hereby clarifies that the provisions of Circular No. 17/17/2017-GST dated 15.11.2017 shall also be applicable to the following types of refund inasmuch as they  pertain to the method of filing of the refund claim and its processing which is consistent with the relevant provisions of the CGST Act, 2017 (hereafter referred to as ‘the CGST Act’) and the CGST Rules, 2017 (hereafter referred to as ‘the CGST Rules’):-

    (i)    refund of unutilized input tax credit where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies) of goods or services or both except those supplies which are notified by the Government on the recommendations of the Council  (section 54(3) of the CGST Act refers);

    (ii)    refund of tax on the supply of goods regarded as deemed exports; and

    (iii)    refund of balance in the electronic cash ledger.

2.0    It is clarified that refund claims in respect of zero-rated supplies and on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger shall be  filed for a tax period on a monthly basis in  FORM GST RFD-01A .However, in case  registered persons having aggregate turnover of up to Rs1.5 crore in the preceding financial  year or the current financial year are opting to file  FORM GSTR-1 quarterly (notification  No. 57/2017-Central Tax dated 15.11.2017 refers), such persons shall apply for refund on a  quarterly basis. Further, it is stated that the refund claim for a tax period may be filed only 

2     after filing the details in  FORM GSTR-1 for the said tax period. It is also to be ensured that  a valid return in  FORM GSTR-3B  has been filed for the last tax period before the one in  which the refund application is being filed. Since the date of furnishing of  FORM GSTR-1 from July, 2017 onwards has been extended while the dates of furnishing of  FORM GSTR 2 and  FORM GSTR 3 for such period are yet to be notified, it has been decided by the  competent authority to sanction refund of provisionally accepted input tax credit at this  juncture. However, the registered persons applying for refund must give an undertaking to the  effect that the amount of refund sanctioned would be paid back to the Government with  interest in case it is found subsequently that the requirements of clause (c) of sub-section (2)  of section 16 read with sub- section (2) of sections 42 of the CGST Act have not been  complied with in respect of the amount refunded. This undertaking should be submitted  manually along with the refund claim till the same is available in  FORM RFD-01A on the  common portal.

3.0    In case of refund claim arising due to inverted duty structure, the following statements - Statement 1 and Statement 1Aof  FORM GST RFD-01A have to be filled:- 

Statement -1 [rule 89(5)]

Refund Type: ITC accumulated due to inverted tax structure [clause (ii) of first proviso to section 54(3)]

(Amount in Rs.)

Statement 1A [rule 89(2)(h)]

Refund type: ITC accumulated due to inverted tax structure [clause (ii) of first proviso to section 54(3)]

4.0    Whereas, the Government has issued notification No. 48/2017-Central Tax dated  18.10.2017 under section 147 of the CGST Act wherein certain supplies of goods have been  notified as deemed export. Further, the third proviso to rule 89(1) of the CGST Rules allows  the recipient or the supplier to apply for refund of tax paid on such deemed export supplies. In case such refund is sought by the supplier of deemed export supplies, the documentary  evidences as specified in notification No. 49/2017- central Tax dated 18.10.2017 are also  required to be furnished which includes an undertaking by the recipient of deemed export  supplies that he shall not claim the refund in respect of such supplies and that no input tax  credit on such supplies has been availed of by him. The undertaking should be submitted  manually along with the refund claim. Similarly, in case the refund is filed by the recipient of  deemed export supplies, an undertaking by the supplier of deemed export supplies that he  shall not claim the refund in respect of such supplies is also required to be furnished  manually. The procedure regarding procurement of supplies of goods from DTA by Export  Oriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / Software  Technology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export as  laid down in Circular No. 14/14/2017-GST dated 06.11.2017 needs to be complied with. 

4.1    Further, as per the provisions of rule 89(2)(g) of the CGST Rules, the following statement 5B of  FORM GST RFD-01A  is required to be furnished for claiming refund on  supplies declared as deemed exports:- 

Statement 5B [rule 89(2)(g)]

Refund type: On account of deemed exports

(Amount in Rs)

5.0    It is reiterated that para 2.5 of Circular No. 17/17/2017-GST dated 15.11.2017 may be  referred to in order to ascertain the jurisdictional proper officer to whom the manual  application for refund is to be submitted. 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  RFD-1B  until the  FORM GST PMT-03 is available on the common portal. Further, the  payment of the sanctioned refund amount shall be made only by the respective tax authority  of the Central or State Government. Thus, the refund order issued either by the Central tax  authority or the State tax/UT tax authority shall be communicated to the concerned counter- 4  part tax authority within seven working days for the purpose of payment of the relevant  sanctioned refund amount of tax or cess, as the case may be. This time limit of seven working  days is also applicable to refund claims in respect of zero-rated supplies being processed as  per Circular No. 17/17/2017-GST dated 15.11.2017 as against the time limit of three days  prescribed in para 4 of the said Circular. It must be ensured that the timelines specified under  section 54(7) and rule 91(2) of the CGST Rules for the sanction of refund are adhered to.

6.0    In order to facilitate sanction of refund amount of central tax and State tax by the  respective tax authorities, it has been decided that both the Central and State Tax authority  shall nominate nodal officer(s) for the purpose of liasioning through a dedicated e-mail id.  Where the amount of central tax and State tax refund is ordered to be sanctioned  provisionally by the Central tax authority and a sanction order is passed in accordance with  the provisions of rule 91(2) of the CGST Rules, the Central tax authority shall communicate  the same, through the nodal officer, to the State tax authority for making payment of the  sanctioned refund amount in relation to State tax and vice versa. The aforesaid  communication shall primarily be made through e-mail attaching the scanned copies of the  sanction order [ FORM GST RFD-04 and  FORM GST RFD-06], the application for refund  in  FORM GST RFD-01A and the Acknowledgement Receipt Number (ARN). Accordingly,  the jurisdictional proper officer of Central or State Tax, as the case may be, shall issue  FORM GST RFD-05  and send it to the DDO for onward transmission for release of  payment. After release of payment by the respective PAO to the applicant’s bank account, the  nodal officer of Central tax and State tax authority shall inform each other. The manner of  communication as referred earlier shall be followed at the time of final sanctioning of the  refund also. 

7.0    In case of refund claim for the balance amount in the electronic cash ledger, upon  filing of  FORM GST RFD-01A  as per the procedure laid down in para 2.4 of Circular No. 17/17/2017-GST dated 15.11.2017, the amount of refund claimed shall get debited in the electronic cash ledger. 

8.0    It is also clarified that the drawback of all taxes under GST (Central Tax, Integrated  Tax, State/Union Territory Tax) should not have been availed while claiming refund of  accumulated ITC under ²[section 54(3)(i)] ^{[helldod old}[section 54(3)(ii)] ^helldod] of the CGST Act. A declaration to this effect forms  part of  FORM GST RFD-01A as well.

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

10.0    Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. 

11.0    Hindi version would follow. 

(Upender Gupta) 
Commissioner (GST)

1. Refer vide:- Circular No. 37/2018-GST dt.15/03/2018

2. Substituted vide:-  Circular No. 37/2018-GST dt.15/03/2018