Refund of Integrated tax paid on goods exported - retro amendment again
SEPTEMBER 22, 2018
By Kaza Subrahmanyam
AS per Section 16 (3) of IGST Act, 2017, a registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:-
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilised input tax credit; or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied,
in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.
In view of the aforesaid provisions, a Registered Person, making zero rated supplies, is permitted to claim either refund of unutilised input tax credit or supply goods or services or both, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied.
RULE 96 OF CGST RULES, 2017.
Rule 96 of CGST Rules, 2017, specifies the procedure for claiming Refund of integrated tax paid on goods or services exported out of India. Sub-rule (10) of CGST Rules, 2017, imposes certain Restrictions on Exporters for claiming Refund of Integrated tax paid on goods Exported.
The following three retrospective amendments, inter alia, were made in Rule 96 of CGST Rules, 2017 w.e.f. 23.10.2017:
(i) In Rule 96 the following sub-rule (9) was inserted vide Notification No. 75/2017 - Central Tax, dated 29th December, 2017, with effect from 23rd October, 2017.
(9) The persons claiming refund of integrated tax paid on export of goods or services should not have received supplies on which the supplier has availed the benefit of notification No. 48/2017-Central Tax dated 18th October, 2017 or notification No. 40/2017-Central Tax (Rate) dated 23rd October, 2017 or notification No. 41/2017- Integrated Tax (Rate) dated 23rd October, 2017
(ii) In Rule 96 for sub-rule (9) the following sub-rule (10) was substituted vide Notification No.03/2018- CT dated 23.01.2018, w.e.f. 23.10.2017.
(10) 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 Government of India, Ministry of Finance, notification No. 48/2017-Central Tax dated the 18th October, 2017 or notification No. 40/2017-Central Tax (Rate) 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate) dated the 23rd October, 2017 or notification No. 78/2017-Customs dated the 13th October, 2017 or notification No. 79/2017-Customs Tax dated the 13th October, 2017.
(iii) Again in Rule 96 for sub-rule (10), the following sub-rule was Substituted vide Notification No. 39/2018 - Central Tax dated 04-09-2018 w.e.f. 23-10-2017.
(10) The persons claiming refund of integrated tax paid on exports of goods or services should not have -
(a) received supplies on which the benefit of the Government of India, Ministry of Finance notification No. 48/2017-Central Tax, dated the 18th October, 2017 or notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017 has been availed; or
(b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017.
SUB-RULE (10) OF RULE 96 WAS AMENDED THREE TIMES RETROSPECTIVELY w.e.f. 23.10.2017.
Let us examine these three retrospective amendments below:
(a) Notification No. 75/2017 - Central Tax, dated 29th December, 2017 {sub-rule (9) of Rule 96 of CGST Rules} w.e.f. 23.10.2017.
As per this sub-rule (9) of Rule 96 of CGST Rules, 2017 w.e.f. 23.10.2017, the persons claiming refund of integrated tax paid on export of goods or services should not have received supplies on which the supplier has availed the benefit of the following notifications.
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S.No.
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Notification
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Remarks.
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1
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This Notification notifies the (i) Supply of goods by a registered person against Advance Authorisation (ii) Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation (iii) Supply of goods by a registered person to Export Oriented Unit (iv) Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation, as DEEMED EXPORTS
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2
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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 CGST (for intra state supplies) or 0.1 per cent IGST (for inter state supplies) subject to fulfilment of the conditions, specified in those respective Notifications.
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3
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(b) Notification No.03/2018- CT dated 23.01.2018, ( In Rule 96 for sub-rule (9) the following sub-rule (10) was substituted, w.e.f. 23.10.2017).
As per sub-rule (10) of Rule 96 of CGST Rules, 2017, 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:
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Notification
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Remarks
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As above
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As above
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3
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As above
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4
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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.
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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.
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5
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Regarding implementation of EPCG Scheme under FTP 2015-2020
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Regarding implementation of Advance Authorisation Scheme under FTP 2015-2020
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Regarding implementation of Advance Authorisation Scheme for annual requirement under FTP 2015-2020.
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Regarding implementation of Advance Authorisation Scheme for deemed export under FTP 2015-2020 ;
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Regarding implementation of Advance Authorisation Scheme for export of prohibited goods under FTP 2015-2020.
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Exemption for import of fabrics under Special Advance Authorization Scheme under para 4.04A of FTP 2015-20 for manufacture and export of garments
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In Notification No.03/2018- CT, dated 23.01.2018, in addition to 3 Notifications viz. No: 48/2017-Central Tax dated 18th October, 2017, No: 40/2017-Central Tax (Rate) dated 23rd October, 2017 and No: 41/2017- Integrated Tax (Rate) dated 23rd October, 2017 which were there in Notification No. 75/2017 - Central Tax, dated 29th December, 2017, the following two Notifications were also added :
(i) Notification No. 78/2017-Customs dated the 13th October, 2017;
(ii) Notification No. 79/2017-Customs Tax dated the 13th October, 2017.
As per Sub-Rule (9) and thereafter (10) of Rule 96 of CGST Rules, 2017, 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 specified Notifications w.e.f. 23.10.2017.
(c) THE THIRD RETRO AMENDMENT in Rule 96 (10) of CGST Rules, 2017, vide Notification No. 39/2018 - Central Tax dated 04-09-2018 w.e.f. 23-10-2017.
Again Rule 96 (10) of CGST Rules, 2017 has been amended retrospectively w.e.f. 23.10.2017, third time vide Notification No: 39/2018-CT dated 4.9.2018, as under :
(i) The persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the benefit of the notification No. 48/2017-Central Tax, dated the 18th October, 2017 or notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017 has been availed;
This means the persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the benefit of Deemed Export notification and Merchant exports concessional rate of tax notifications have been availed.
(ii) The persons claiming refund of integrated tax paid on exports of goods or services should not have availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017.
As per this, the persons claiming refund of integrated tax paid on exports of goods or services should not have availed the benefit of specified notifications under EOU Scheme, EPCG Scheme and Advance Authorisation scheme etc.
IMPLICATIONS OF AMENDMENT VIDE Notification No. 39/2018 - Central Tax dated 04-09-2018 w.e.f. 23-10-2017.
The following are the implications of the aforesaid retrospective amendment:
(a) As per Notifications 75/2017 - Central Tax, dated 29th December, 2017 and Notification No.03/2018- CT, dated 23.01.2018, it was the condition 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 specified Notifications.
Here, the case is that if the supplier of goods has availed the benefit of specified notifications, the person receiving supplies from such supplier should export goods under Letter of Undertaking. In other words, the recipient of such supplies should not pay IGST on goods or services exported and claim refund.
Vide Circular No. 45/19/2018-GST dated 30.5.2018, it has been clarified by CBEC, that the restriction under sub-rule (10) of rule 96 of the CGST Rules is only applicable to those exporters who are directly receiving goods from those suppliers who are availing the benefit under notification No. 48/2017-Central Tax dated the 18th October, 2017, notification No. 40/2017-Central Tax (Rate) dated the 23rd October, 2017, or notification No. 41/2017-Integrated Tax (Rate) dated the 23rd October, 2017 or notification No. 78/2017- Customs dated the 13th October, 2017 or notification No. 79/2017-Customs dated the 13th October, 2017.
It was further clarified in the said Circular that there might be a scenario where a manufacturer might have imported capital goods by availing the benefit of Notification No. 78/2017-Customs dated 13.10.2017 or 79/2017-Customs dated 13.10.2017. Thereafter, goods manufactured from such capital goods may be supplied to an exporter. It is hereby clarified that this restriction does not apply to such inward supplies of an exporter.
(b) As per Notification No. 39/2018 - Central Tax dated 04-09-2018, w.e.f. 23.10.2017, the condition is that the persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the benefit of the specified notifications are availed. This is totally contrary to the position under Notification No.03/2018- CT, dated 23.01.2018, as given in (a) above.
As per the amendment dated 4.9.2018, the condition is that the persons claiming refund of integrated tax paid on exports of goods should not have received supplies on which the benefit of the specified notification are availed. The amending Notification No: 39/2018 - Central Tax dated 04-09-2018, has retrospective operation from 23.10.2017 and if any person who has claimed refund of Integrated Tax paid on export of goods has also claimed the benefit of specified Notifications during the period 23.10.2017 to 4.9.2018, Department may direct such persons to return amount of IGST refunded to them.
(c) In view of the Notification 39/2018 - Central Tax, dated 04-09-2018, w.e.f. 23.10.2017, 100% EOUs, Advance/EPCG Authorisation Holders, Merchant Exporters who have received supplies at concessional rate of duty and suppliers claiming deemed export benefit may be required only to export goods under LUT without payment of IGST. In fact, even under pre-GST Regime, Advance Authorisation Holders and EPCG holders were exporting goods on payment of Excise duty and claiming refund.
(The views expressed are strictly personal)
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