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Can Refund be claimed if wrong payment under GST made?

CA Umesh Sharma 
on 28 November 2017

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Arjuna (Fictional Character): Krishna, what would happen of the amount paid to Government by mistake or if paid but under wrong head?

Krishna (Fictional Character): Arjuna, due to technical issues taxpayers have paid wrong amount to the government. Sometimes they pay excess amount. In that case i.e. Amount is paid in excess of actually payable to the Government’s treasury, then we will get ITC for that in next tax period. But if there is no liability to set off the ITC, then that amount will be refunded to the taxpayer.

Arjuna: Krishna, What are the situations which lead to claim the refund from the government?

Krishna: Arjuna, following are the situations which will lead to the claim of refund from the Government:

1. Export of goods or services
2. Supplies to SEZs units and developers
3. Deemed exports
4. Refund of taxes on purchase made by UN or embassies etc.
5. Refund arising on account of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court
6. Refund of accumulated Input Tax Credit on account of inverted duty structure
7. Finalization of provisional assessment
8. Refund of pre-deposit
9. Excess payment due to mistake
10. Refunds to International tourists of GST paid on goods in India and carried abroad at the time of their departure from India
11. Refund on account of issuance of refund vouchers for taxes paid on advances against which, goods or services have not been supplied
12. Refund of CGST & SGST paid by treating the supply as intrastate supply which is subsequently held as inter-State supply and vice versa

Arjuna: Krishna, what is the procedure to claim the refund?

Krishna: Arjuna, to claim the refund, following three things to remember and the following procedure is to be initiated as per given case:

1. Refund of IGST paid on export of goods - No separate application is required as shipping bill itself will be treated as application for refund.

2. Refund of IGST paid on export of services / zero-rated supplies to SEZ units or SEZ developers - Printout of FORM GST RFD01A needs to be filed manually with the jurisdictional GST officer along with relevant documentary evidence, wherever applicable.

3. Refund of unutilized input tax credit due to the accumulation of credit of tax paid on inputs or input services used in making zero-rated supplies of goods or services or both - FORM GST RFD-01A needs to be filed on the common portal of GSTN. The amount of credit claimed as a refund would be debited in the electronic credit ledger and proof of debit needs to be generated on the common portal. Printout of the FORM GST RFD- 01A needs to be submitted before the jurisdictional GST officer along with necessary documentary evidence, wherever applicable.

Arjuna: Krishna, when and how much refund will be granted by the Government?

Krishna: Arjuna,

1. GST law also provides for the grant of provisional refund of 90% of the total refund claim, in case the claim relates to refund arising on account of zero-rated supplies.

2. The provisional refund would be paid within 7 days after giving the acknowledgment.

3. The acknowledgment of refund application is normally issued within a period of 14 days but in case of refund of integrated tax paid on zero-rated supplies, the acknowledgment would be issued within a period of three days.

4. The provisional refund would not be granted to such supplier who was, during any period of five years immediately preceding the refund period, was prosecuted.

Arjuna: Krishna, what lesson the taxpayer should take from GST?

Krishna: Arjuna, there are many procedures which still needs to be completed under the GST regime. The working capital of taxpayer is decreasing as the amount is deposited with the government. So doing business becomes a difficult task. Because of this, the government has brought this option i.e to claim the refund. Until and unless this process of filing application becomes online it would be very difficult to get the refund. The taxpayers who are willing to claim the refund shall claim the same after understanding the new provisions relating to refund. But when the refund will be received by them, God only knows!


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