The Central Board of Indirect Taxes & Custom (CBIC) has come out with detailed guidelines relating to sanction, post-audit and review of refund claims for GST assessees.

These guidelines aim to ensure uniformity and enabling effective monitoring of sanction of refund claims and safeguard interest of tax department. Through these guidelines, the board emphasised on the importance of natural justice principle before issuing a detailed speaking order providing a basis for sanction/rejection of refund. It also laid down certain parameters which should be present in the speaking order regarding the sanction of refund e.g. period, date of filing and category relating to refund, details of deficiency memo in Form GST RFD-03, compliance with limitation, details regarding SCN issuance and assessee’s reply etc.

These guidelines carved out additional details that should be inserted in the order in cases such as refund of accumulated input tax credit, refund of IGST paid on account of zero-rated supplies, refund of tax paid on supplies regarded as deemed export, refund of excess balance in cash ledger, and refund filed under ‘other categories’.

In respect of post-audit and review, the board instructed that all refund orders are required to be reviewed for examination of legality and propriety and for considering large number of refund claims filed in GST, states that post-audit may henceforth be conducted only for refund claims amounting to ₹1 lakh or more till further instructions, the guidelines said.

Standard of instructions

Harpreet Singh, Partner with KPMG, said issuance of standard instructions for sanction and review of refunds with detailed list of items/ documents to be verified by officers is likely to result in uniformity of procedure across the field formations and hopefully into speedy refunds and better working capital management for the industry. “Also, exempting refund claims less than ₹1 lakh for post-audit, would ease the compliance burden of small exporters,” he said.

The board says has been receiving reports of different practices being followed by the field formations regarding sanction, review and post-audit of refund claims. In certain Commissionerates, speaking order is being issued in respect of all refund claims, whereas in others, speaking orders are not being issued if the refund is sanctioned in full.

Similarly, in case of review and post-audit, different practices are being followed by the field formations. The matter has been examined with the twin purpose of ensuring uniformity in procedure and enabling effective monitoring of sanction of refund claims in order to safeguard interest of revenue. Accordingly, instructions/guidelines for sanction, post-audit and review of refunds have been issued, the board said.

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