seeks to clarify certain refund related issues

Circular No. 147/03//2021-GST

CBEC-20/23/03/2020-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing

New Delhi, Dated the 12th March, 2021

To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Director Generals/ Director Generals (All)
Madam/Sir,

Subject: Clarification on refund related issues – Reg.

Various representations have been received seeking clarification on some of the issues
relating to GST refunds. The issues have been examined and to ensure uniformity in the
implementation of the provisions of law across the field formations, the Board, in exercise of
its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017
(hereinafter referred to as “CGST Act”), hereby clarifies the issues detailed hereunder:

2. Clarification in respect of refund claim by recipient of Deemed Export Supply

2.1 Representations have been received in respect of difficulties being faced by the
recipients of the deemed export supplies in claiming refund of tax paid in respect of such
supplies since the system is not allowing them to file refund claim under the aforesaid category
unless the claimed amount is debited in the electronic credit ledger.
2.2 Para 41 of Circular No. 125/44/2019 – GST dated 18/11/2019 has placed a condition
that the recipient of deemed export supplies for obtaining the refund of tax paid on such
supplies shall submit an undertaking that he has not availed ITC on invoices for which refund
has been claimed. Thus, in terms of the above circular, the recipient of deemed export supplies
cannot avail ITC on such supplies but when they proceed to file refund on the portal, the system
requires them to debit the amount so claimed from their electronic credit ledger.
2.3 The 3rd proviso to Rule 89(1) of CGST Rules, 2017 allows for refund of tax paid in case
of a deemed export supply to the recipient or the supplier of deemed export supplies. The
said proviso is reproduced as under:
“Provided also that in respect of supplies regarded as deemed exports, the application
may be filed by, –

(a) the recipient of deemed export supplies; or
(b) the supplier of deemed export supplies in cases where the recipient does not avail
of input tax credit on such supplies and furnishes an undertaking to the effect that the
supplier may claim the refund”
From the above, it can be seen that there is no restriction on recipient of deemed export
supplies in availing ITC of the tax paid on such supplies when the recipient files for refund
claim. The said restriction has been placed by the Circular No. 125/44/2019-GST dated
18.11.2019.
2.4 In this regard, it is submitted that in order to ensure that there is no dual benefit to the
claimant, the portal allows refund of only Input Tax Credit (ITC) to the recipients which is
required to be debited by the claimant while filing application for refund claim. Therefore,
whenever the recipient of deemed export supplies files an application for refund, the portal
requires debit of the equivalent amount from the electronic credit ledger of the claimant.
2.5 As stated above, there is no restriction under 3rd proviso to Rule 89(1) of CGST Rules,
2017 on recipient of deemed export supply, claiming refund of tax paid on such deemed export
supply, on availment of ITC on the tax paid on such supply. Therefore, the para 41 of Circular
No. 125/44/2019-GST dated 18.11.2019 is modified to remove the restriction of non-availment
of ITC by the recipient of deemed export supplies on the invoices, for which refund has been
claimed by such recipient. The amended para 41 of Circular no. 125/44/2.019-GST dated
18.11.2019 would read as under:
“41. Certain supplies of goods have been notified as deemed exports vide notification
No. 48/2017-Central Tax dated 18.10.2017 under section 147 of the CGST Act. Further,
the third proviso to rule 89(1) of the CGST Rules allows either the recipient or the
supplier to apply for refund of tax paid on such deemed export supplies. In case such
refund is sought by the supplier of deemed export supplies, the documentary evidences
as specified in notification No. 49/2017- Central Tax dated 18.10.2017 are also required
to be furnished which includes an undertaking that the recipient of deemed export
supplies shall not claim the refund in respect of such supplies and shall not avail any
input tax credit on such supplies. Similarly, in case the refund is filed by the recipient of
deemed export supplies, an undertaking shall have to be furnished by him stating that
refund has been claimed only for those invoices which have been detailed in statement
5B for the tax period for which refund is being claimed and the amount does not exceed
the amount of input tax credit availed in the valid return filed for the said tax period.
The recipient shall also be required to declare that the supplier has not claimed refund
with respect to the said supplies. The procedure regarding procurement of supplies of
goods from DTA by Export Oriented Unit (EOU) / Electronic Hardware Technology
Park (EHTP) Unit / Software Technology Park (STP) Unit / Bio-Technology Parks (BTP)
Unit under deemed export as laid down in Circular No. 14/14/2017-GST dated
06.11.2017 needs to be complied with.

Circular_Refund_147

Spread the love