FEBRUARY 24, 2018

By Kaza Subrahmanyam

RULE 96 of CGST Rules, 2017, prescribes the procedure to claim Refund of integrated tax paid on goods or services exported out of India. "Services" are included under this Rule w.e.f. 23.10.2017. Some restrictions are placed in Rule 96w.e.f. 23.10.2017, to the effect that the persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the supplier has availed the benefit of the Notifications issued for Deemed Exporters, Merchant Exporters, EOU, EPCG Scheme, Advance Authorisation etc. These amendments are discussed below:

(A) Procedure to claim Refund in case of export of Goods:

(1) The shipping bill filed by an exporter of goods shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India and such application shall be deemed to have been filed only when:-

(a) the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export; and

(b) the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR3B, as the case may be.

(2) The details of the relevant export invoices in respect of export of goods contained in FORM GSTR-1 shall be transmitted electronically by the common portal to the system designated by the Customs and the said system shall electronically transmit to the common portal, a confirmation that the goods covered by the said invoices have been exported out of India.

(3) In case the date for furnishing the details of outward supplies in FORM GSTR-1 for a tax period has been extended, the supplier shall furnish the information relating to exports as specified in Table 6A of FORM GSTR-1 after the return in FORM GSTR-3B has been furnished and the same shall be transmitted electronically by the common portal to the system designated by the Customs. The information in Table 6A furnished shall be auto-drafted in FORM GSTR-1 for the said tax period.

(4) Upon the receipt of the information regarding the furnishing of a valid return in FORM GSTR-3or FORM GSTR-3B, as the case may be, from the common portal, the system designated by the Customs or the proper officer of Customs, as the case may be, shall process the claim of refund in respect of export of goods, and an amount equal to the integrated tax paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant mentioned in his registration particulars and as intimated to the Customs authorities.

(5) The claim for refund shall be withheld under the following circumstances, when :

(a) a request has been received from the jurisdictional Commissioner of central tax, State tax or Union territory tax to withhold the payment of refund due to the person claiming refund.In such case, the proper officer of integrated tax at the Customs station shall intimate the applicant and the jurisdictional Commissioner of central tax, State tax or Union territory tax, as the case may be, and a copy of such intimation shall be transmitted to the common portal. Upon transmission of the intimation, the proper officer of central tax or State tax or Union territory tax, as the case may be, shall pass an order in Part B of FORM GST RFD-07.

Subsequently, where the applicant becomes entitled to refund of the amount withheld the concerned jurisdictional officer of central tax, State tax or Union territory tax, as the case may be, shall proceed to refund the amount after passing an order in FORM GST RFD-06.

(b) the proper officer of Customs determines that the goods were exported in violation of the provisions of the Customs Act, 1962.

6. The Government may pay refund of the integrated tax to the Government of Bhutan on the exports to Bhutan for such class of goods as may be notified in this behalf and where such refund is paid to the Government of Bhutan, the exporter shall not be paid any refund of the integrated tax.

(B) Procedure to claim Refund in case of Export of Services:

With effect from 23rd October, 2017, as inserted vide Notification No. 75/2017-CT dated 29.12.2017, the application for refund of integrated tax paid on the services exported out of India shall be filed in FORM GST RFD-01 and shall be dealt with in accordance with the provisions of Rule 89 of CGST Rules, 2018.

Under Rule, 89 of CGST Rules, 2017, any person, claiming refund of any tax, interest, penalty, fees or any other amount paid by him, may file an application electronically in FORM GST RFD-01, through the common portal, either directly or through a Facilitation.

The following categories of persons are not covered under the aforesaid Rule 89 of CGST Rules, 2017.

(a) Persons specified under Notification issued under Section 55 of CGST Act, 2017. Section 55 deals with Refund by specialized agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries and any other person or class of persons as may be specified in this behalf.

(b) Refund of integrated tax paid on goods exported out of India.

(C) RESTRICTIONS under Rule 96 of CGST Rules, 2017, w.e.f. 23.10.2017.

Sub-Rule (10) of Rule 96 has been substituted w.e.f 23.10.2017 vide Notification No.03/2018- CT dated 23.01.2018. This new sub-rule imposes a restriction that the persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the supplier has availed the benefit of the following Notifications :

(i) Notification No. 48/2017-Central Tax. dated the 18th October, 2017

(ii) Notification No. 40/2017-Central Tax (Rate), dated 23rd October, 2017 or Notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017

(iii) Notification No. 78/2017-Customs dated the 13th October, 2017

(iv) Notification No. 79/2017-Customs dated the 13th October, 2017.

The essence of aforesaid five Notifications is as under :

(a) Notification No: 48/2017-Central Tax, dated 18.10.2017, notifies the supplies of goods listed in the Table below as deemed exports :

(b) Notification No. 40/2017-Central Tax (Rate), dated 23rd October, 2017 or Notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017.

These Notifications exempt the intra-State or inter state supply of taxable goods by a registered supplier to a registered recipient for export, from so much of the central tax / IGST leviable thereon as is in excess of the amount calculated at the rate of 0.05 per cent (for intra state supplies) or 0.1 per cent (for inter state supplies) subject to fulfilment of the conditions, specified in those respective Notifications.

(c) Notification No. 52/2003-Customs, dated 31st March, 2003 has been amended by Notification No. 78/2017-Customs dated 13th October, 2017. This amendment seeks to exempt goods imported by EOUs from (A) the whole of the duty of customs leviable thereon under the First-Schedule to the Customs Tariff Act, 1975 and the additional duty, if any, leviable thereon under sub-sections (1), (3) and (5) of section 3 of the said Customs Tariff Act; and (B) the integrated tax and compensation cess leviable thereon under subsections (7) and (9), respectively of section 3 of the said Customs Tariff Act, 1962.

(d) Notification No. 79/2017-Customs dated the 13th October, 2017 is an amending Notification of the following Notifications. This amendment Seek to amend various Customs notifications in order to exempt Integrated Tax/Cess on import of goods under Advance Authorisation/EPCG. Schemes.

(i) Notification No:16/2015-Customs, dated 1st April, 2015 - Regarding implementation of EPCG Scheme under FTP 2015-2020 ;

(ii) Notification No:18/2015-Customs, dated 1st April, 2015 - Regarding implementation of Post Export EPCG Scheme under FTP 2015-2020;

(iii) Notification No: 20/2015-Customs, dated 1st April, 2015 - Regarding implementation of Advance Authorisation Scheme for annual requirement under FTP 2015-2020;

(iv) Notification No: 21/2015-Customs, dated 1st April 2015 - Regarding implementation of Advance Authorisation Scheme for deemed export under FTP 2015-2020;

(v) Notification No: 22/2015-Customs, dated 1st April, 2015- Regarding implementation of Advance Authorisation Scheme for export of prohibited goods under FTP 2015-2020;

(vi) Notification No: 45/2016-Customs, dated 13th August, 2016 - Exemption for import of fabrics under Special Advance Authorization Scheme under para 4.04A of FTP 2015-20 for manufacture and export of garments

Therefore, with effect from 23.10.2017, there is a restriction that the persons claiming refund of integrated tax paid on export of goods or services under Rule 96 of CGST Rules, 2017, should not have received supplies on which the supplier has availed the benefit of the aforesaid Notifications.

(The author is an Indirect Tax Consultant at Vadodara and the views expressed are strictly personal.)