In an excellent circular (no.37/11/2018-GST dated March 15, 2018), the Central Board of Excise and Customs (CBEC) has clarified many issues relating to refunds under the Goods and Services Tax (GST), central excise and service tax laws. It says a supplier availing of drawback only with respect to basic customs duty shall be eligible for refund of unutilised input tax credit (ITC) of Central/State/Union Territory/Integrated GST and compensation cess. And, that refund of eligible credit on account of State GST shall be available even if the supplier of goods or services or both has availed of the drawback in respect of Central GST. While processing refund claims on account of zero-rated supplies, the officers must take cognisance of the information contained in Table 9 of Form GSTR-1 of subsequent tax periods. They must examine the value of goods declared in the GST invoice and in the corresponding shipping bill or bill of export, and sanction the lesser of the two values as refund. They should not insist upon proof of realisation of export proceeds for processing of refund claims related to goods. Invoice copies are necessary for processing refund claims. However, apart from the documents listed in the circular, no other documents should be called for from taxpayers, unless these are not electronically available with the officers. Only one deficiency memo must be issued for one refund application. When the applicant gives a fresh application, pursuant to a deficiency memo, no new deficiency memo should be issued. Unless the deficiencies pointed to in the original memo remain unrectified, wholly or partly, or any other substantive deficiency is subsequently noticed. A self-declaration that the applicant has not been prosecuted is not required with every refund application. Wherever zero-rated supplies have been made before filing a Letter of Undertaking (LUT) and refund claims for unutilised input tax credit have been filed, the delay in furnishing an LUT should be condoned.
And, the substantive benefits of zero rating should not be denied. Wherever export of goods have been made after expiry of the prescribed three-month period, the jurisdictional commissioner may extend the time limit, so as not to deny the benefit of zero-rated supplies. Merchant exporters may procure goods on payment of 0.1 per cent tax or full GST and take the ITC. The supplier may claim refund of the unutilised ITC. While claiming the refund, the transitional credit pertaining to excise duty, service tax, etc, cannot be said to have been availed of during the relevant period. And, thus, cannot be treated as part of ‘Net ITC’. Also, refund claims of such duties or taxes must be processed under the relevant laws and granted in cash. No refund of the amount of Cenvat credit should be granted if the said amount has been transitioned under GST. The exporter, at his or het option, may file a refund claim for one calendar month or quarter or by clubbing successive calendar months or quarters. The calendar month(s)/quarter(s) for which the claim has been filed, however, cannot spread across different financial years. The circular recognises but does not fully resolve the problem of exporters unable to claim refund of the ITC taken in an earlier period and exports made in a later period. CBEC deserves appreciation for the clarifications.