CBIC notifies changes in GST rules on refund, revocation of cancellation

Central Board of Indirect Taxes & Custom (CBIC) has notified changes in GST refund policy and revocation of cancellation of registration rules. Experts feel that these changes will give some relief to GST assesses.

Based on the notification, now refund application can be withdrawn at any time prior to issuance of refund provisional/final/payment/withhold/ rejection order. Some changes have been made in the procedure of withheld refund. The withheld refund can be released after the satisfaction of the proper officer or Commissioner.

Explaining these, Pawan Arora, Partner at Athena Law Associates, said that the biggest dispute regarding time limit of the new filing of refund application after receipt of deficiency notice had been resolved. Now, the time period up to date of communication of deficiency notice will not be counted in two years limitation for fresh refund application. “In my view, it should be given retrospective effect to dispose-off the pending litigations on this issue before the Courts,” he said.

Jay Jhaveri, Co-Partner at Bhuta Shah & Co summarised the changes into four - excluding time taken by GST officer in communicating deficiencies in refund application from the period of limitation provided under the act, enabling option for taxpayers to withdraw refund application post filing but before order for the same has been passed, enabling powers to proper officer for release of withheld refund if satisfied that the same is no longer liable to be withheld and simplifying the process in case refund is to be adjusted against any outstanding demand under the law.

According to him, though some expected changes have been left out, still changes made in CGST rules are critical that will have a far-reaching impact and will go a long way in easing the working capital burden for small taxpayers. However, “What remains to be seen is whether the GST officers will use these provisions and grant benefits to the tax-payers or behave conservatively in this regard as most of the reliefs are dependent on proper officers exercising the necessary powers after proper due diligence,” he said.

Revocation of cancelled registration

Section 23 of CGST Rules prescribe a process through which a registered person, whose registration is cancelled by the proper officer on his own motion, may apply for revocation of cancellation of registration, in FORM GST REG-21 within a period of 30 from the date of order for cancellation. After this line, the notification adds “or within such time period as extended by the Additional Commissioner or the Joint Commissioner or the Commissioner.”

According to Jhaveri, powers have now been given to relevant officers to extend timelines if taxpayers have not made an application for revocation within the specified time provided under the rules. “This was extremely necessary given the pandemic wherein taxpayers were unable to file returns on time leading to Suo-moto cancellation by the department,” he said.

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