Procedure for getting GST refund on cancellation of Flat / Supply of Service Contract

POINTER

DETAILS

Who can claim Refund under this?

• Unregistered buyer, upon cancellation/termination of agreement for supply of service (and where time limit for adjustment by credit note is over for supplier of over as per Sec 34(1) of CGST Act 2017) can claim refund of GST amount paid to supplier.
• Example:
  • Person has booked the flat, paid all the amount including GST in FY 2018 but afterwards deal is cancelled in 2021
  • Premium paid for long term insurance including GST, but afterwards such insurance policy is cancelled.

Procedure to claim Refund of GST by such unregistered buyer

[Temporary GST Registration to Unregistered Buyer]

• New functionality has been made available on the common portal which allows unregistered persons to take a temporary GST registration
• The unregistered person, who wants to file an application for refund shall obtain a temporary GST registration on the common portal using his PAN
• While doing so, the unregistered person shall select the same state/UT where his/her supplier.
• Thereafter, the unregistered person would be required to undergo Aadhaar authentication in terms of provisions of rule 10B of the CGST Rules.
• Further, the unregistered person would be required to enter his bank account details in which he seeks to obtain the refund of the amount claimed.
• The applicant shall provide the details of the bank account which is in his name and has been obtained on his PAN.
• Where the suppliers, in respect of whose invoices refund is to be claimed, are registered in different States/UTs, the applicant shall obtain temporary registration in the each of the concerned States/UTs where the said supplier are registered

Refund application is to be filed in which Form?
and What document is required?

- Apply for refund in Form RFD 01 under the category ‘Refund for Unregistered person’ along with Statement 8 details asked therein and document mentioned in below para.

• Statement containing the details of invoices ( viz. number, date, value, tax paid and details of payment), in respect of which refund is being claimed
• Copy of such invoices, proof of making such payment to the supplier, the copy of agreement or registered agreement or contract, as applicable, entered with the supplier for supply of service,
• the letter issued by the supplier for cancellation or termination of agreement or contract for supply of service,
• details of payment received from the supplier against cancellation or termination of such agreement along with proof thereof
• Certificate issued by the supplier to the effect that he has paid tax in respect of the invoices on which refund is being claimed by the applicant; that he has not adjusted the tax amount involved in these invoices against his tax liability by issuing credit note; and also, that he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices

- Separate applications for refund have to be filed in respect of invoices issued by different suppliers

Time limit for claiming Refund

• Within Two years from date of issuance of letter of cancellation of the contract/ agreement for supply by the supplier.

Refund is allowed of which amount

• The refund amount claimed shall not exceed the total amount of tax declared on the invoices in respect of which refund is being claimed.
• In cases where the amount paid back by the supplier to the unregistered person on cancellation/termination of agreement/contract for supply of services is less than amount paid by such unregistered person to the supplier, only the proportionate amount of tax involved in such amount paid back shall be refunded to the unregistered person

Refund is not allowed in case of

• Refund claim can be filed by the unregistered persons only in those cases where at the time of cancellation/termination of agreement/contract for supply of services, the time period for issuance of credit note under section 34 of the CGST Act has already expired

If such period is not expired, then refund application can not be filed

Action by Officer

• After scrutiny of refund application, proper officer shall also upload a detailed speaking order along with the refund sanction order in FORM GST RFD-06