The
application filed for refund of unutilized ITC on account of
zero-rated supplies (with payment of tax or without
payment of tax under Bond/LUT) has to be accompanied
by documentary evidence as may be prescribed
to establish that a refunds due to the applicant; and
such documentary or other evidence (including the
documents referred to in section 33 of the CGST Act,
2017) as the applicant may furnish to establish that
the amount of tax and interest, if any,
paid on such
tax or any other amount paid in relation to which such
refund is claimed was collected from, or paid by, him
and the incidence of such tax and interest had not been
passed on to any other person.
Rule 89(2) of
the CGST Rules, 2017, specifies documents to be attached
with the refund application in case of different types of Refund applicants.
However, it has been
provided under section 54(4) of the CGST Act, 2017, that
where the amount claimed as refund is less than two
lakh rupees, it shall not be necessary for the
applicant to furnish any documentary and other evidences but he
may file a declaration,
based on the documentary
or other evidences available with him, certifying that
the incidence of such tax and interest had not been
passed on to any other person.
It has also been provided
under section 54(6) of the CGST Act, 2017, that in
cases where the claim for refund on account of zero-rated
supply of goods or services or both made by registered
persons, other than such category of registered
persons as maybe notified
by the Government on the
recommendations of the Council, refund on a
provisional basis, ninety per cent. of the total amount so
claimed, excluding the amount of input tax credit
provisionally accepted; and the final order shall be issued
within sixty days from the date of
receipt of application
complete in all respects (section 54(7) of the CGST Act,
2017 refers).
Rule 91 of CGST Rules,
2017 provide that the provisional refund is to be granted
within 7 days from the date of acknowledgement of the
refund claim. An order for provisional refund is to
be issued in Form GST RFD 04 along with payment advice
in the name of the claimant in Form GST RFD 05. The
amount will be electronically credited to the claimant’s
bank account. The rules also prescribe the provisional
refund will not be granted to if the person claiming
refund has, during any period of five years immediately
preceding the tax period to which the claim for refund
relates, been prosecuted for any offence under the Act
or under an earlier law where the amount of tax evaded
exceeds two hundred and fifty lakh rupees.
It may also be noted that
by default, the refund is to be credited to the Consumer
Welfare Fund, except in the cases below:-
(a) Refund of tax paid on
zero-rated supplies of goods or services or both or on
inputs or input services used in making such
zero-rated supplies;
(b) Refund of unutilised
input tax credit under section 54(3) of the CGST Act,
2017;
(c) Refund of tax paid on
a supply which is not provided, either wholly or
partially, and for which invoice has not been issued, or where
a refund voucher has been issued;
(d) Refund of tax in
pursuance of section 77;
(e) The tax and interest,
if any, or any other amount paid by the applicant, if
he had not passed on the incidence of such tax and
interest to any other person;
(f) The tax or interest
borne by such other class of applicants as the
Government may, on the
recommendations of the
Council, by notification, specify.
Formula for grant of
refund in cases where the refund of accumulated Input Tax
Credit is on account of zero rated supply is based on
the following:
Refund Amount = (turnover
of zero rated supply of goods + turnover of zero
rated supply of services) x Net ITC /Adjusted total turnover
Where: -
(A) “Refund amount” means
the maximum refund that is admissible;
(B) “Net ITC” means input
tax credit availed on inputs and input services during
the relevant period;
(C) “Turnover of
zero-rated supply of goods” means the value of zero-rated
supply of goods made during the relevant period
without payment of tax under bond or letter
of undertaking;
(D) “Turnover of
zero-rated supply of services” means the value of
zero-rated supply of services
made without payment of
tax under bond or letter of undertaking,
calculated in the following
manner, namely: -
Zero-rated supply of
services is the aggregate of the payments received
during the relevant period for zero-rated
supply of services and zerorated supply of services where
supply has been completed for which
payment had been received in advance in any period
prior to the relevant period reduced by advances
received for zerorated supply of services for
which the supply of services has not been
completed during the relevant period;
(E) “Adjusted Total
turnover” means the turnover in a State or a Union
territory, as defined under subsection (112) of section 2,
excluding the value of exempt supplies other than
zero-rated supplies, during the relevant
period;
(F) “Relevant period”
means the period for which the claim has been filed.
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