The administration of tax is run through a mechanism there by maintaining a fine balance between the revenue collection and cash follow available to the business. In every tax statute there has to be a provision of refund for any amount which was not levy and collected properly or for the amount which by the process of law is required to be refunded. The Goods and Service Tax Act 2017 in Chapter XI has dealt with the provisions of refund elaborately. In this paper we will examine the concept of refund in terms of substantial law and Rules as made available under the statute.
Section 54 of the GST Act is substantive provision for claiming the refund. It plainly says that any person claiming any refund of any tax and interest or any amount may made an application in prescribed manner within two years of the relevant date. Section 54 visualize certain refunds which are required to be given if claimed within time. Some of the situations for claiming the refund in terms of Section 54 and Section 77 of the CGST act are as follows:
1. Export of goods or services
2. Supplies to SEZ 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 provision assessment
8. Refund of pre-deposit
9. Excess payment due to mistake
10. Refund to international tourists of CST paid on goods in India and carried abroad at the time of their departure from India
11. Refund on account of issuance of refund voucher 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 intra-State supply which is subsequently held as inter-State supply and vice versa
Refund of tax in following situations:-
a) Zero rated supply: It means export goods and services or both and supply to SEZ developer or to a SEZ unit.
Here the exporter has two options, he may export the goods with payment of IGST and get the amount refunded as per provision of the CGST Act, 2017. In alternative he may export under Bond or LUT and claim the refund of input tax credit as per statute.
b) Payment of wrong tax: The payment of tax under wrong head is to be refunded and any application in this regard will be entertained without subjecting the same to the provision of unjust enrichment.
c) Refund to causal/non resident taxable person: Any advance payment of tax paid by the casual/non taxable person is to be refunded if the advance deposit is more than the actual tax liability on supply.
d) Refund to UN and other notified bodies: Section 55 of the CGST Act mandates that tax paid by the UN, consulate or embassy or foreign county or any other person specified in this behalf here is to be refunded, the relevant date is before the expire of the six months from the last date of the quarter in which was supplies were received. Refund to International Tourist. The integrated tax paid by tourist living India or any supply of the goods taken out of India by him is to be refunded [Section 15] of the IGST Act.
Here refund of IGST is applicable goods only and services is non included in the head.
Refund of the accumulated credit:
Any credit accumulated on account of rate of tax of inputs being higher than the rate of tax on output supply (other than Nil rated and fully exempted supply) is to be refunded [Section 54(3)(III) of the GST Act 2017].
The refund of the credit which has be accumulated due to the fact that the rate of supply is less than the credit availed is permissible under law. However in the following categories unutilized credit is not permissible when there is difference in rate of tax input and the rate of tax on output supply (Notification 5/2017 dated 28.06.2017 Central Tax (Rate) and 05/2017 date 28.06.2017 Integrated Tax.)
Any delay in refund attracts interest @ rate of 9% if tax is ordered to be refunded in terms of Section 54 (5) i.e. where order to give refund came into force after an appellate order which attend finality. In any other case the rate of interest is upto 6% as notified by the government. [Notification No. 13/2017-C.T. dated 28.06.2017.