Now, claim refunds on cancelled flat booking, insurance policy – The Hindu BusinessLine*****

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The process requires the buyer to get temporary registration on the GST portal to claim the refund

Experts say the government should consider making the process simpler for unregistered persons | Photo Credit: Shivendu Jauhari

An unregistered buyer (mostly individual customer) will need to get temporary registration on the GST portal to get the tax refund in case of cancellation of flat booking or insurance policy and exhaustion of time period of issuance of credit note by the concerned supplier, the Central Board of Indirect Taxes & Custom (CBIC) said in a circular.

The move follows recommendations by the GST council. The unregistered buyer will have to obtain the registration using her/his PAN, following which she/he shall select the same State/UT as her/his supplier — in respect of whose invoice refund is to be claimed — is registered. The buyer is also required to enter bank account details in which she/he seeks to obtain the refund.


According to Saket Parwari, Executive Director with Nexdigm, one of the critical aspects is that the circular permits refund only in those cases where at the time of cancellation/termination of contract, the time period for issuance of credit note has already expired. Hence, restriction on refund claim has been prescribed by way of a circular thereby drawing a distinction between cases.

“There could be scenarios where the supplier has no further outward GST liability to adjust the tax paid through credit notes and hence, the condition of surpassing the time limit seems unreasonable and could be prone to litigation. This is so, as the tax authorities could seek to reject the refund claims of buyers/recipients basis this circular,” he said.

Gopal Mundhra, Partner, Economic Laws Practice, said the refund application is to be filed within a period of two years from the date of tax invoice. While the circular mentions the situation of premature termination of long-term insurance contracts and cancellation of construction contracts with builders, it should ideally be applicable in all other similar situations where a service contract has been terminated/cancelled and the suppliers could not issue credit note.

Jatin Arora, Partner, Phoenix Legal, said requirements such as obtaining a temporary registration or a statement from the supplier to the extent that tax has been paid or that she/he has not claimed a refund for such tax, makes the whole process cumbersome.

Further, “situations where the supplier no longer exists (either due to merger or project takeover) or has undergone liquidation, have not been envisaged at present. The government should consider removing hardships and making the overall process a lot simpler for the unregistered persons,” he said.

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