CBIC has issued clarification via a circular w.r.t. refund-related issues based on several representations received by the GST practitioners and taxpayers. Accordingly, master circular on Refunds No. 125/44/2019-GST dated 18.11.2019 stand modified to that extent.
1. Bunching of refund claims across Financial Years (Clubbing of multiple tax period in one refund application)
Clarification: Applicant can file at his option refund applications for a single tax period or multiple tax period in a financial year. However, the period for which a refund claim has been filed cannot be spread across different financial years. Registered persons having an aggregate turnover of up to Rs. 1.5 crore in the preceding financial year or the current financial year opting to file FORM GSTR-1 on a quarterly basis, can only apply for a refund on a quarterly basis or clubbing successive quarters as aforesaid. However, refund claims under categories listed at (a), (c) and (e) in para 3 above must be filed by the applicant chronologically. This means that an applicant, after submitting a refund application under any of these categories for a certain period, shall not be subsequently allowed to file a refund claim under the same category for any previous period
2. Refund of accumulated input tax credit (ITC) on account of the reduction in GST Rate
Clarification: Refund on account of inverted duty structure is allowed, however no refund of accumulated ITC allowed where inversion is on account of change in the tax rate.
Similarly, It is hereby clarified that the refund of accumulated ITC under clause (ii) of sub-section (3) of section 54 of the CGST Act (Inverted Duty Structure) would not be applicable in cases where the input and the output supplies are the same. Refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies.
3. Change in the manner of refund of tax paid on supplies other than zero-rated supplies
Clarification: Refund of tax paid on supplies other than zero-rated supplies will now be admissible proportionately in the respective original mode of payment i.e. in cases of refund, where the tax to be refunded has been paid by debiting both electronic cash and credit ledgers (other than the refund of tax paid on zero-rated supplies or deemed export), the refund to be paid in cash and credit shall be calculated in the same proportion in which the cash and credit ledger has been debited for discharging the total tax liability for the relevant period for which application for refund has been filed. Such amount, shall be accordingly paid by the issuance of an order in FORM GST RFD-06 for amount refundable in cash and FORM GST PMT-03 to re-credit the amount attributable to credit as ITC in the electronic credit ledger
4. Refund of the invoices not reflecting in GSTR2A
Clarification: Refund of accumulated ITC shall be restricted to the ITC as per those invoices, the details of which are uploaded by the supplier in FORM GSTR-1 and are reflected in the FORM GSTR-2A of the applicant. In short no refund if the invoice is not available in GSTR2A. This is in line with the restriction of ITC under section 36(4)
5. New Requirement to mention HSN/SAC in Annexure 'B'
Clarification: The applicant is, in addition to details already prescribed in Annexure B, now required to mention HSN/SAC code which is mentioned on the inward invoices. In cases where supplier is not mandated to mention HSN/SAC code on invoice, the applicant need not mention HSN/SAC code in respect of such an inward supply. This amendment is brought to segregate ITC on account of capital goods, input services and inputs.