Refund relief

Mohan Lavi | Updated on March 21, 2018

Centre clears the air on GST refunds on exports

An editorial in this newspaper on February 22 aptly captured the issues plaguing small units that have applied for a refund of GST and concluded with a plea to the Centre to address the concerns of small units quickly. The Centre appears to have listened and has issued Circular No. 37/11/2018-GST dated March 15 apart from other initiatives.

The eight-page Circular has responded to 13 issues that have prevented processing of the refunds quickly. Other initiatives taken include observe a special drive refund sanction fortnight (March 15-19) on an all India scale for which additional staff and infrastructure have been mobilised.

Special refund cells manned by experienced staff are being put in place all over the country. The finance ministry has said the delays in refunds were primarily because of incorrect filling of the forms.

Refund circular

Circular No. 37/11/2018-GST is unique in that it has managed to give instructions to both taxpayers as well as the field officers in the same Circular, as against the practice of the latter being given by way of internal instructions. One of the most common reasons for the delay in refunds was because of data mismatches between the GST forms and shipping bills.

The Circular provides a solution by educating taxpayers that Table 9 of GSTR-1 is the go-to Table to rectify any data mismatches. In the same breadth, the Circular instructs the field officers to follow Circular No. 26/26/2017-GST (December 29, 2017) for rectification of errors made while filing the returns and process the refund application accordingly. Some exporters have complained that they have been asked to pay integrated tax where the goods have been exported but not within three months from the date of the issue of the invoice for export.

The Circular clarifies that exports have been zero-rated under the IGST Act, 2017 and, as long as goods have actually been exported even after a period of three months, payment of integrated tax first and claiming refund at a subsequent date should not be insisted upon.

In such cases, the jurisdictional Commissioner may consider granting extension of time limit for export as provided in the said sub-rule on post facto basis keeping in view the facts and circumstances of each case. The above principle should be followed in case of export of service also.

The Circular states that refund applications under the erstwhile indirect tax laws and those in which the taxpayer has claimed Duty Drawback would be rejected suo moto. Some exporters have filed their Letters of Undertaking (LoU) after the goods/services were exported; the Circular emphasizes that the substantive benefits of zero rating may not be denied where it has been established that exports in terms of the relevant provisions have been made.

The delay in furnishing of LoU in such cases may be condoned and the facility for export under LoU may be allowed on ex-post facto basis taking into account the facts and circumstances of each case.

The Circular, though belated, should come as a relief to exporters who now have an idea as to what to do and, more importantly, what not to do when they apply for a GST refund. Refund applications this month may be delayed due to the ides of March but should pick up from next month. Hopefully, there will be no new complications to obtain a GST refund.

The writer is a chartered accountant

Published on March 21, 2018

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