By CA Gurjot Singh
Under Goods & Service Tax regime, any registered person who exports the goods or services out of India to any place outside India, shall be eligible to refund of GST. As per the GST Law, a registered person making zero rated supply (also known as export supplies) is eligible to claim refund within 2 years from the relevant date under either of the following options :
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Export of goods or services under Bond or LUT (Letter of Undertaking) without payment of taxes and claim a refund of unutilized Input Tax Credit (ITC);
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Export of goods or services on payment of IGST claim refund of IGST paid on goods or services.
Note : By zero rating it is meant that the entire supply chain of a particular zero rated supply is tax free i.e. there is no burden of tax either on the input side or on output side.
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Refund under LUT/Export of goods or services or both without payment of taxes
As per section 54(3) of CGST Act, 2017, a registered person may claim a refund of unutilized ITC at the end of the month in which the exports have been done. To export the goods or services under Bond or LUT, a registered person has to obtain LUT through GST Portal by filing GST RFD-11. A LUT once obtained is valid only till the end of financial year in which it was obtained and thus, it needs to be renewed every financial year.
The application for refund (GST RFD-01) of unutilized ITC on account of zero-rated supplies without payment of tax (under Bond/LUT) has to be accompanied by various documentary evidence as mentioned in the Circular No. 125/44/2019 dated 18.11.2019. Annexure A of the said circular specifies the list of documents and declarations which needs to be furnished while filing the application for refund (GST RFD-01) through GST portal.
Time line to process refund by department
CGST Rules, 2017 provides that the provisional refund (90% of refund) is to be granted within 7 days from the date of acknowledgement of the refund claim. An order for provisional refund is to be issued in Form GST RFD 04 along with payment advice in the name of the claimant in Form GST RFD 05. The amount will be electronically credited to the registered person’s declared bank account. The balance refund to be issued within 60 days. If the refund is not issued within 60 days, interest @ 6% p.a. would be payable under section 56 of the CGST Act, 2017.
In case the Jurisdictional officer is of the view that whole or part of the refund amount claimed by registered person in GST RFD-01 is not admissible or not payable to the applicant, he shall issue a notice in GST RFD-08 to the applicant and the applicant would be required to reply in GST RFD-09 within 15 days of receipt of GST RFD-08.
Deficiencies in Refund Application filed by applicant (GST RFD-03)
On the basis of scrutiny of the refund application and attachments filed by the applicant, in case, any deficiencies are noticed in refund application, Deficiency Memo will be issued in Form GST RFD-03 by the Jurisdictional Officer. Upon issuance of Deficiency Memo, the amount which was debited in electronic credit ledger while submitting refund application (RFD-01) will automatically be re-credited with the same amount. In such a case, the applicant will need to file a fresh refund application for the same period again, after eliminating the deficiencies as observed by the jurisdictional officer.
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Refund under export of goods with payment of taxes (IGST Refund)
Under this category, refund of integrated tax (IGST) paid for the zero-rated supplies made by suppliers who opt for the route of export on payment of integrated tax and claim refund of such tax paid.
Under export with payment of IGST, there is no need for filing a separate refund claim as the shipping bill filed by the exporter is itself treated as a refund claim. As per rule 96 of the CGST Rules, 2017, the shipping bill filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India.
Keep this in mind for claiming IGST Refund
Once the shipping bill, export general manifest (EGM) is filed along with GSTR 1 & GSTR 3B for the relevant period is filed, the application for refund shall be considered to have been filed and refund shall be processed by the department. It is very important to note that the information has to be completely filed in Table 6A of GSTR 1 and it should match with the information available in shipping bills. Mismatch in any figures will lead to SBXX errors and will result into delayed refunds.
