Deposit of erroneous refund can claim back as ITC

Where a registered person deposits the amount of erroneous refund sanctioned to him, – {Rule 86(4B)}

(a) under sub-section (3) of section 54 of the Act, or

(b) under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96,

along with interest and penalty, wherever applicable, through FORM GST DRC-03, by debiting the electronic cash ledger, on his own or on being pointed out, an amount equivalent to the amount of erroneous refund deposited by the registered person shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.

Analysis

Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A –

When any excess or erroneous refund stationed to assesse then had been back by them either on their own or on being pointed by the tax officer. In order to resolve this issue, GSTN has recently developed a new functionality of FORM GST PMT-03A which allows proper officer to re-credit the amount in the electronic credit ledger of the taxpayer.

Following types of refund erroneously refund

a. Refund of IGST obtained in contravention of sub-rule (10) of rule 96.

b. Refund of unutilised ITC on account of export of goods/services without payment of tax.

c. Refund of unutilised ITC on account of zero-rated supply of goods/services to SEZ developer/Unit without payment of tax.

d. Refund of unutilised ITC due to inverted tax structure.

Procedure

Till the time an automated functionality for handling such cases is developed on the portal, the taxpayer shall make a written request, in the format enclosed as Annexure-A, to the jurisdictional proper officer to re-credit the amount equivalent to the amount of refund thus paid back through FORM GST DRC-03, to electronic credit ledger.

The proper officer, on being satisfied that the full amount of erroneous refund along with applicable interest, as per the provisions of section 50 of the CGST Act, and penalty, wherever applicable, has been paid by the said registered person in FORM GST DRC-03 by way of debit in electronic cash ledger, he shall re-credit an amount in electronic credit ledger, equivalent to the amount of erroneous refund so deposited by the registered person, by passing an order in FORM GST PMT-03A, preferably within a period of 30 days from the date of receipt of the request for re-credit of erroneous refund amount so deposited or from the date of payment of full amount of erroneous refund along with applicable interest, and penalty, wherever applicable, whichever is later.