from India Tax & Regulatory Services
Government issues clarifications to further ease the procedure for filing and sanction of export refunds
March 16, 2018
In brief
Based on representations and to ensure uniformity in the implementation of the refund provisions relating to export of goods and services, the Central Board of Excise and Customs (Board) has issued Circular No. 37/11/2018 - GST dated March 15, 2018 to clarify various aspects relating to processing and sanction of refund claims. The Board had earlier issued Circular No. 17/17/2017 – GST dated 15 November 2017 and Circular No. 24/24/2017 – GST dated 21 December 2017 clarifying a broad range of issues relating to processing of refund claims.
In detail
The key clarifications are summarised as follows:
1. Simultaneous availment of
Drawback and refund of unutilised ITC permissible
An exporter/ supplier availing drawback only with respect to basic customs duty shall be eligible for refund of unutilised input tax credit (ITC) of Central Tax/ State Tax/ Union Territory Tax/ Integrated Tax/ Compensation Cess.
Refund of eligible credit on account of State Tax shall be available even if the exporter/ supplier has availed drawback in respect of Central Tax.
2. Exports made before filing Letter of Undertaking (LUT) eligible for zero rating
A detailed procedure for filing of LUT for exporters of goods or services without payment of Integrated Tax has already been specified vide Circular No. 8/8/2017- GST dated 04 October 2017.
In some cases zero rated supplies have been made before filing of LUT and refund claims have been filed for unutilised ITC.
The Circular clarifies that the delay in furnishing of LUT in such cases may be condoned and the facility for export under LUT may be allowed retrospectively taking into account the facts and circumstances of each case.
3. No requirement to pay tax if exports actually made (even after specified time period)
Rule 96A (1) of Central Goods and Service Tax
Rules 2017 (CGST Rules) stipulates that any registered person who exports goods or services is liable to pay tax along with interest if the goods are not exported, or payment of services are not realised within a specified time period.
It is clarified by the Board that exporters are not required to pay any integrated tax for not exporting the goods within the time period and claim a refund, as long as the goods are actually exported.
The Jurisdictional Commissioner may grant extension of time limit for export on post facto basis keeping in view the facts and circumstances of each case.
This principle is also applicable for export of services.
PwC Page 2 4. Transitional credit is not
eligible for refund as unutilised ITC in GST
Transitional credit carried forward under TRAN-1 cannot be included in Net ITC as defined under Rule 89 of CGST Rules for computation of refund of ITC.
Net ITC includes only ITC availed on inputs and input services availed during the relevant period. It does not include duties and taxes paid under the central excise or service tax laws.
5. Input taxes paid under existing laws to be claimed as refund only under those laws (not as refund in GST)
Refund applications of ITC availed under the erstwhile laws are to be made only in accordance with the procedure prescribed therein.
GST officers are advised not to accept GST refund
applications for such refunds.
Applications filed have to be rejected by passing a rejection order.
Board has noticed that the GST officers are rejecting, withholding or re-crediting CENVAT Credit while processing claims of refund filed under the erstwhile laws.
It is clarified that -
Amount of refund arising out of such claims shall be refunded in cash.
Refund of CENVAT Credit should not be granted if the amount is transitioned under GST.
Any refund amount rejected fully or partially shall lapse and cannot be transitioned to GST.
6. Refund claims can be clubbed for successive months/quarters
It is possible that exports are not made in the period in which the inputs or input services were received and ITC has been availed and vice versa.
Board clarifies that relevant period is defined in Rule 89(4) of CGST Rules in the context of the refund claim and does not link it to a tax period.
Therefore, exporters have the option of filing refund claims for one calendar month/
quarter or by clubbing successive calendar months/
quarters but such calendar month/ quarter shall not spread across different financial years.
7. Bank Realisation Certificate (BRC)/
Foreign Inward
Remittance Certificate (FIRC) is not required for export of goods
Realisation of convertible foreign exchange is one of the conditions for export of services but it is not a
condition for export of goods.
The Rules prescribe filing of the relevant BRC or FIRC only for export of services.
For exporters of goods, there is no requirement to
demonstrate proof of
realisation of export proceeds and therefore, Board has clarified that submission of such realisation details should not be insisted for processing refund claims relating to export of goods.
8. Supplies to merchant exporters
Supplies to merchant exporters are allowed at a concessional rate of 0.05% of CGST or 0.1% of Integrated
Goods and Services Tax (IGST) subject to certain conditions prescribed for the purpose.
It is clarified that the concessional rate is optional and exporters can procure goods at the normal applicable tax rate.
The exporters will be eligible to take credit of tax paid at 0.05%/ 0.1%.
Suppliers who supply goods at the concessional rate are also eligible to claim refund on account of inverted tax structure in such instances
It is further clarified that the merchant exporter in such cases shall export goods only under LUT/ Bond and cannot export on payment of IGST.
9. GSTR-1 Table 9 amendment to be considered while
processing refund claims
Board acknowledges that refund claims were not processed on account of mismatches between data contained in GSTR-1, GSTR- 3B and shipping bills.
If an assessee commits an error while entering details of an invoice/ shipping bill/ bill of export in Table 6A or Table 6B of GSTR-1, he can rectify the error in Table 9 of GSTR-1.
GST officers are advised to process refund claims on account of zero rated supplies based on the information contained in Table 9 of GSTR- 1 of subsequent tax periods, wherever applicable.
In case of any discrepancies in the data provided by the assesse in GSTR-1 and GSTR- 3B, GST officers shall refer to Circular No. 26/26/2017-GST dated 29 December, 2017, which provides for
rectification of errors in GSTR-
3B by the assessees, for processing of refund claims.
10. Deficiency memo for refund applications to be issued only once
It’s clarified by the Board that if a deficiency memo is issued in GST RFD03 for a refund application, a fresh refund application is required to be filed manually in GST RFD01A.
The application should be accompanied by the original ARN number, debit entry number generated originally and a hard copy of the original refund application filed online.
A deficiency memo will not be issued against the fresh application unless the
deficiencies pointed out in the original memo are not
rectified, either wholly or partly, or if any substantive deficiency is notified subsequently.
11. Self-declaration for non- prosecution is not
required along with every refund claim
When a self-declaration is filed at the time of submission of LUT that the exporter has not been prosecuted, the GST officers should not insist on filing such self-declaration along with every refund claim.
12. Lower of the values as per GST invoice and shipping bill/ bill of export to be considered for sanction of refund
Export value indicated in the tax invoice by an exporter should be the transaction value as determined in terms of section 15 of the CGST Act, 2017.
Exporter should indicate the same transaction value in the corresponding shipping bill/
bill of export.
At the time of processing of refund claims, the value of goods declared in the tax invoice and the value declared in the corresponding shipping bill/ bill of export should be examined and the lower of the two values should be
considered for sanction of refund claims.
13. Invoices should be submitted for processing of refund claims
Board has stressed the importance of scrutiny of invoices based on which exporters file refund claims.
Due to delay in
operationalising requisite modules on the common portal, the invoices based on which exporters claim refund may not be available on the portal.
Since refund claims are filed by the exporters in a semi- electronic environment and is completely based on the information provided by them, Board insists that the invoices are scrutinised.
14. Documents prescribed for scrutiny of refund claims
Board clarifies that only the following documents listed in the table below could be called for scrutiny and that no other document should be sought for unless they are not available with the officers electronically.
Type of Refund Documents to be submitted
Export of Services (with payment of tax) (Refund of IGST paid on export of services)
Copy of FORM RFD-01A filed on common portal
Copy of Statement 2 of FORM RFD-01A
Invoices w.r.t inputs, input services and capital goods
BRC/ FIRC for export of services
Undertaking/ Declaration in FORM RFD-01A Export of goods or services (without payment
of tax)
(Refund of accumulated ITC of IGST/ CGST/
State GST/ Union Territory GST/ CESS)
Copy of FORM RFD-01A files on common portal
Copy of Statement 3A of FORM RFD-01A generated on common portal
Copy of Statement 3A of FORM RFD-01A
Invoices w.r.t input and input services
BRC/ FIRC for export of services
Undertaking/ Declaration in FORM RFD-01A
PwC Page 2
The takeaways
The Board has announced the fortnight from 15th to 29th March, 2018 as a refund fortnight. The Circular has been issued by the Board to further ease the process and expedite the sanction of pending export refund claims.
Further, the Board has emphasised that substantive benefits should not be denied to exporters if it is established that exports were
made in terms of the relevant provisions. While most of the clarifications would benefit the exporters in quick processing of the refund claims, the
requirement of submission of invoices would be a challenge for large exporters, where the volume of such invoices would be very high. A sample verification or a certification by an accountant in such cases would further facilitate
the processing of such claims. It is hoped that the revenue
authorities follow this circular in true and full spirit to achieve the objective of easing the cash flow blockage for exporters.
Let’s talk
For a deeper discussion of how this issue might affect your business, please contact your local PwC advisor
For private circulation only
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwCPL, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. Without prior permission of PwCPL, this publication may not be quoted in whole or in part or otherwise referred to in any documents.
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