Refunds Flashcards

1
Q

What are the various time limits which are applicable in relation to refunds - Application, sanctioning of refund order etc.?

A

Time limit within which refund can be claimed as per rule 89 - Any person claiming refund of any tax, interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of 2 years from the ‘Relevant Date’ in prescribed form and manner [Section 54(1)]- Meaning of relevant date from Explanation 2 to section 54.

Time-limit for issuance of refund order: Refund order shall be issued by the proper officer within 60 days from the date of receipt of application complete in all respects [Section 54(7)] - counted from the date of filing claim for refund as mentioned in the acknowledgment received for refund claim [Section 54(7) read with rule 90(1) and 90(2)].

Time limit for claiming refund in relation to unutilised ITC - Refund claim on account of inverted duty structure is required to be filed within 2 years from the due date for furnishing of return under section 39 for the period in which such claim for refund arises.

If the above refund is in relation to a refund obtained without payment of tax - Then 2 year limit to be seen the relevant date as above.

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2
Q

What is the requirement of payment of Interest when the refund is not sanctioned within the time limit of 60 days as aforesaid?

A

Interest is payable on such refund @ 6% p.a.*.

Interest is payable to the applicant from the date immediately after the expiry of 60 days from the date of receipt of application under the section 54(1) till the date of refund of such tax [Section 56 of CGST Act].

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3
Q

What are the crucial provisions relating to the grant of refund on a provisional basis as per section 54(6) read with rule 91?

A
  • The proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons
  • other than such category of registered persons as may be notified by the Government on the recommendations of the Council
  • refund on a provisional basis, 90% of the total amount so claimed, excluding the amount of ITC provisionally accepted
  • thereafter make an order under section 54(5) for final settlement of the refund claim after due verification of documents furnished by the applicant
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4
Q

What are some conditions, limitations and safeguards which needs to be followed when granting of provisional refund as per section 54(6) read with rule 91?

A

The provisional refund shall be granted subject to the condition that the person claiming refund has, during any period of 5 years immediately preceding the tax period to which the claim for refund relates, not been prosecuted for any offence under the Act

or under an existing law where the amount of tax evaded exceeds ` 2.5 crores

After prima facie satisfaction of the claim made, the proper officer shall make an order in prescribed form, sanctioning the amount of refund due to the said applicant on a provisional basis within a period not exceeding 7 days from the date of the acknowledgement.

The proper officer shall issue a payment order for the amount sanctioned. The same shall be electronically credited to any of the bank accounts of the applicant mentioned in his registration particulars and as specified in the application for refund on the basis of a consolidated payment advice

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5
Q

Who and when can file refund claim when the supplies are regarded as deemed exports as per rule 89(1)?

A
  • either recipient or supplier are allowed to file the refund application.
  • The supplier can seek refund only in case where the recipient does not avail of ITC on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund [Third proviso to rule 89(1)].
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6
Q

Who and when can refund claim be filed of supplies to a SEZ unit or SEZ developer as per the provisions of rule 89(1)?

A

Application for refund shall be filed by the -

(a) Supplier of goods after such goods have been admitted in full in the SEZ for authorised operations, as endorsed by the specified officer of the Zone.
(b) Supplier of services along with such evidence regarding receipt of services for authorised operations as endorsed by the specified officer of SEZ [Second proviso to rule 89(1)].

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7
Q

Who and when can refund claim be filed for Supplies by Casual taxable person (CTP) /Non-resident taxable
person (NRTP) as per rule 89(1)?

A

The amount of advance tax paid could be refunded only when such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39 [Section 54(13)].

Further, refund of any amount, after adjusting the tax payable by the applicant out of the advance tax deposited by him under section 27 at the time of registration, shall be claimed in the last return required to be furnished by him [Fourth proviso to rule 89(1)].

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8
Q

What are some important documentary evidences required to claim refund of export of goods / Export of services as per rule 89(2)?

A

documentary evidences as applicable, in Annexure 1 of Form GST RFD-01 for refund claim, to establish that a refund is due to the applicant:

  • A judgment, decree, order/direction of Appellate Authority, Appellate Tribunal/any Court
  • export of services - statement containing the number and date of invoices and the relevant Bank Realization Certificates or Foreign Inward Remittance Certificates (BRC/FIRC), as the case may be
  • export of goods - statement containing the number and date of shipping bills or bills of export and the number and date of relevant export invoices.
  • documentary evidence in the form of a statement containing no. and date of relevant BRCs/FIRCs are not required here - However, in case of non-realization of consideration in terms of FEMA, the exporter may be called upon to repay the refund claimed by him [Rule 96B].
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9
Q

During the process of acknowledgement of refund claims as per rule 90, if the proper officer finds Deficiencies in refund claim, what is the action that needs to be done?

A

Where any deficiencies are noticed, the proper officer shall communicate the deficiencies to the applicant in Deficiency memo, requiring him to file a fresh refund application after rectification of such deficiencies [Rule 90(3)].

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10
Q

What are the cases where the theory of unjust enrichment is inapplicable as per Section 54(8),(8A),(9)?

A

Section 54(8) stipulates that the refundable amount shall, instead of being credited to the Consumer Welfare Fund, be paid to the applicant, if such amount is relatable to —

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11
Q

What is the refund of unutilized ITC that is available when Zero rated supplies are made without payment of tax under the support of Bond/LUT?

A

Supply of goods and/ or services to an SEZ developer/unit or export of goods and/or services under bond or Letter of Undertaking (LUT) without payment of IGST, subject to such conditions, safeguards and procedure as may be prescribed, are zero rated supplies without payment of tax.

In such cases, refund of unutilised ITC at the end of any tax period, of amount determined under rule 89(4), shall be granted to the applicant and the electronic credit ledger shall be debited by the applicant by an amount equal to the refund so claimed.

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12
Q

What is the meaning of Turnover of zero-rated supply of goods?

A

the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less

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13
Q

What is the summary of the provision relating to refund of unutilized ITC on export of zero rated goods under bond/LUT?

A

as per clause (i) of first proviso to section 54(3), a registered person may claim refund, of any unutilised ITC in the case of zero rated supply made without payment of tax at the end of any tax period.

However, second proviso to section 54(3) lays down that refund of unutilized ITC is not allowed if the goods exported out of India are subjected to export duty - This is pretty much implied since the section clearly provides the scenario only when the same is made without payment of taxes.

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14
Q

What are the provisions of refund of unutilised ITC in case of inverted duty structure of domestic supplies or even for export supplies

A

The term ‘Inverted duty structure’ refers to a situation where the rate of tax on inputs is higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies).

As a result, the higher tax paid on inputs gets accumulated in the Electronic Credit Ledger of the taxpayer

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15
Q

What are some supplies of specified goods/ services, where refund of unutilized ITC on account of inverted duty structure is NOT allowed?

A

Government may, on the recommendations of the Council, notify supplies of certain goods or services or both where no refund of unutilized ITC on account of inverted duty structure is allowed.

For instance, supply of construction of complex services specified in para 5(b) of Schedule II of the CGST Act, rail locomotives powered from an external source of electricity or by electric accumulators

However, it is clarified that this restriction on refund of unutilized ITC of GST paid on inputs is not applicable in case of zero rated supply of specified goods or services, i.e. (a) exports of said goods or services or both; or (b) supply of said goods or services or both to a SEZ developer/unit

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16
Q

How the refund of unutilised ITC on account of inverted duty structure be made as per rule 89(5)?

A

stipulates that in the case of refund on account of inverted duty structure, refund of ITC shall be granted as per the following formula.

“Net ITC” means ITC availed on inputs during the
relevant period other than the ITC availed for which refund is claimed under sub-rules (4A) or (4B) or both.

17
Q

What is the meaning of adjusted total turnover while computing for refund of unutilised ITC as per rule 89(4) and 89(5)?

A

Adjusted Total Turnover” means the sum total of the value of:

(a) the turnover in a State or a Union territory, as defined under section 2(112), excluding turnover of services; &
(b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply of services,
* *excluding**:
(i) the value of exempt supplies other than zero-rated supplies; and
(ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any, during the relevant period

18
Q

What is the meaning of deemed exports as per the provisions of section 2(39)?

A

As per section 2(39), deemed exports means such supplies of goods as may be notified under section 147.

Supplies to EOU is notified as deemed export under section 147 vide Notification No. 48/2017 CT dated 18.10.2017.

19
Q

What is the eligibility for refund unutilised ITC at the end of any tax period for Zero rated supplies without payment of tax? if the export is of exempt supply will the benefit of refund still be allowed as per Rule 89(4)?

A

Section 16(2) of the IGST Act, 2017 stipulates that subject to the provisions of section 17(5) of the CGST Act, ITC may be availed for making zero-rated supplies, notwithstanding that such supply may be an exempt supply.

Section 54(3) of the CGST Act, 2017 allows refund of ITC in the case of zero rated supply made without payment of tax.

Rule 89(4) stipulates that in the case of zero-rated supply of goods or services or both without payment of tax under bond/LUT - See image on how to do the same.

See the meaning of Turnover of zero rated supply of goods from another flashcard.

20
Q

With reference to section 54(3), mention the cases where refund of unutilised ITC is allowed and not allowed?

A

Refund of unutilized ITC shall not be allowed if the goods exported out of India are subjected to export duty.

Refund of ITC shall not be allowed if the supplier of goods or services or both avails of drawback in respect of CGST or claims refund of the IGST paid on such supplies

Allowed:

Accumulated ITC on account of inverted duty structure: 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), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council - Will be directly credited to the applicant instead of taking it to the consumer welfare fund.

21
Q

What is the relevant date as per explanation to section 2 to section 54 for services exported out of India?

A

See for other situations in page 15.9- This is only relevant date for export of services.