Overview

A. Background

With the advent of Goods and Services Tax (“GST’) in India, the biggest tax reform of the country, the export procedure for both goods and services has undergone a sea change. In the earlier Service Tax regime (Finance Act, 1994), there was no procedure prescribed for export of services. However, under the GST regime, the procedure for export of services has been prescribed at par with the export of goods. That the procedure for export of goods and services is similar, with not much of a difference.

Section 16 of the IGST Act deals with the provisions relating to ‘Zero Rated Supply’. Export supplies and supplies to SEZs / FTWZs under GST are classified as zero rated supplies. The said section further provides that ‘export of services’ can take place in either of the following two ways:

• Export without GST payment: the supplier may supply services under bond or letter of undertaking (LUT) without payment of GST and claim the refund on all the input taxes paid subject to such conditions, safeguards and procedure as prescribed.
• Export with GST payment: the supplier may supply services on payment of GST and subsequently claim the refund of such taxes on goods or services or both supplied subject to such conditions, safeguards and procedure as prescribed.

As per the refund provisions (refer to Rule 89 to 96A) of the CGST Rules, 2017, a registered person may make zero-rated supplies of goods or services or both on payment of IGST and claim refund of the tax paid, or make zero-rated supplies of goods or services or both under bond or LUT without payment of IGST and claim refund of unutilized input tax credit in relation to such zero rated supplies.

In this regard, the Central Board of Excise and Customs (“CBEC”) has prescribed a detailed procedure for online refund to the taxpayers on account of zero-rated supplies such as exports or supplies to SEZ. However, due to the non-availability of refund module on GSTN portal, taxpayers are facing hardships in claiming such refunds online.

To remove this anomaly, CBEC vide its Notification No. 55/2017- Central Tax dated 15th November, 2017 has introduced a new rule 97A in the CGST Rules, 2017, which permits taxpayers to submit refund applications manually in the prescribed form (i.e., Form GST RFD 01A).

In this regard, CBEC has also issued a Circular No.  17/17/2017-GST dated 15th November prescribing procedure and conditions for manual filing and processing of refund claims in respect of such zero-rated supplies.

The key highlights of the aforesaid circular issued by the CBEC are discussed as under:-

B.  Applicability of the Circular issued by the CBEC

The aforesaid circular dated 15th November, 2017 issued by the CBEC is applicable to the following categories of refund claim:-

Non LUT Cases

• Where refund claim is for IGST paid on goods exported out of India [i.e., where bond or letter of undertaking is not furnished by the exporter under section 16(3) of IGST Act, 2017];
• Where refund claim is for IGST paid on goods or services supplied to SEZ units or SEZ developers;

Cases where LUT / Bond is furnished

• Where refund claim is for unutilized input tax credit of taxes paid on inputs or input services used in making such zero-rated supplies [ i.e.where bond or letter of undertaking needs to be furnished by the exporter under section 16(3) of IGST Act, 2017]

C.   Procedure for filing such refund claims

S.No	Category of Refund	Process of Filing
1.	Refund of IGST paid on export of goods	No separate application is required for claiming such refunds manually. The Shipping Bill(s) filed by the respective exporter itself will be treated as the application for refund under this manual mechanism.   Further the application would be considered to be filed only when export manifest / export report and a valid return in Form GSTR-3 or Form GSTR3-B have been furnished with the concerned officer.
2.	Refund of IGST paid on goods or services supplied to SEZ units or SEZ developers	Form GST RFD-01A needs to be filed on GSTN portal and thereafter the claimant has to take the printout of said form (duly filled up) and submit with the jurisdictional GST officer (Centre or State) along with relevant documents as 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 and/or services.	Form GST RFD-01A needs to be filed on GSTN portal. The amount of credit claimed as refund would be debited in the electric credit ledger of the claimant and proof of such debit needs to be generated on the common portal.   Thereafter, the claimant has to take the printout of such form (duly filled up) and submit the same before the jurisdictional GST officer along with necessary documents.

D.    Sanction of Refund claim by the concerned Authority   

• The registered person is at liberty to file a refund application before the Central Tax Authority or the respective State Tax Authority and the authority (either Centre or State) with whom such refund claim is filed would process the refund claim accordingly;
• Provisional refund (i.e., 90 per cent of the total refund claim) will be granted separately for each head CGST/ SGST / UTGST / IGST/ Cess within 7 days of filing and the order for such provisional refund would be issued in FORM GST RFD-04;
• After sanction of such provisional refund, final order would be issued within 60 days after due verification of the documentary evidences in Form GST RFD-06;
• Where any amount claimed as refund is rejected either fully or partly, the amount debited to the extent of rejection, shall be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03. The amount would be credited by the proper officer using FORM GST RFD-01B subject to the condition that the amount not sanctioned is eligible for re-credit;

Payment of Final Sanctioned refund amount in respect of central taxes such as CGST / IGST would be made by the Central Tax Authority while payment of Sanctioned refund amount in respect of state taxes such as SGST/UTGST would be made by the State Authority