Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing vide Circular dated 31st March, 2020 issued and has published explaining on reimbursement connected issues.


Using its powers deliberated by section 168 (1) of the Central Goods and Services Tax Act, 2017, hereby simplifies the detailed issues relating to GST refunds hereunder:
1.     Gathering of refund claims across Financial Years

a) Through circular, the said constraint on the clubbing of tax periods across financial years for claiming refund thus has been continued which is reproduced as beneath:

Refund claim may be filed by claimant for a tax period or by clubbing following tax periods. A person who is registered with total turnover of up to Rs. 1.5 crore in the earlier financial year/ present financial year and filing GSTR-1 on quarterly basis, can be the one who apply for refund on a quarterly basis or clubbing following quarters. However, refund claims under classes listed at (a), (c) and (e) in para 3 above must be filed by the applicant in chronological order. This means that an applicant, after submitting a refund application under any of these categories for a definite period, shall not be later permitted to file a refund claim under the same category for any earlier period. This limit, though, shall not be applicable where a fresh application is being filed pursuant to a deficiency memo having been issued in past.”

b) Hon’ble Delhi High Court, in the case of M/s Pitambra Books Pvt Ltd. has observed that the circulars can supersede but not supplement the law. Circulars might ease consistencies of law by granting administrative relief beyond relevant provisions of the law. Nevertheless, central government is not empowered to remove benefits or compel stricter conditions than projected by the law.

The issue has been examined and it has been decided to remove the control on clubbing of tax periods across financial years. In view of that, circular stands tailored to that degree i.e. the constraint on group of refund claims across financial years shall not be valid

2.   Refund of accrued input tax credit (ITC) on account of reduction in GST Rate
Refund of accumulated ITC under CGST Act would not be applicable in cases where the input and the output supplies are one and the same.

3.  Change in method of refund of tax paid on supplies other than zero rated supplies
a) Circular classifies the reimbursement applications to be submitted in Form GST RFD-01 as beneath:
•    Refund of not in use input tax credit (ITC) on account of exports with no payment of tax;
•    Refund of those paid tax arise on export of services with payment of tax;
•    Refund of with no utilized ITC due to supplies made to SEZ Unit with no payment of tax;
•    Refund on those supplies where tax is paid and made to SEZ Unit with payment of tax;
•    Refund of with no utilized ITC on account of addition due to inverted tax structure;
•    Refund to those suppliers who paid tax on deemed export supplies;
•    Refund to those recipient who paid tax on deemed export supplies;
•    Refund of those surplus amounts
•    Refund of extra payment of tax;
•    Refund due to assessment/provisional assessment/appeal/any other order;
•    Refund on those supplies which is made in the same state where tax is paid and which is afterwards held to be inter State supply and conversely;
•    Refund due to any other valid ground or reason.

b) For the refund of tax paid falling in categories specified at between 1-5 point above i.e., refund claims on supplies other than zero rated supplies, no different debit of ITC from electronic credit ledger is necessary to be made by the applicant at the time of filing refund claim, being claim of tax claim previously compensated.

c) Under CGST Rules, 2017, sub-rule (4A) has been inserted in rule 86 which states as under:

Where a person who is registered has claimed reimbursement of tax amount which was paid mistakenly for which amount got debited from the electronic credit ledger, the wrong amount, shall be assigned back to the electronic credit ledger if found allowable by the authorised officer by an instruction all the way through form GST PMT-03.

d) Further, under CGST Rules, 2017, sub-rule (1A) has also been inserted in rule 92 which states as under:

Where, upon checking the request of refund of tax paid amount except the refund of tax paid on zero-rated supplies or deemed export, the proper officer if satisfied that a refund is due and payable to the applicant now, he shall make a command in Form RFD-06 approving the amount of refund to be paid, in cash, equivalent to the amount debited in cash against the total amount paid for clearing tax liability for the applicable period, mentioning therein the amount settled against any outstanding demand under the Act or under any existing law and the rest amount refundable and for the remaining amount which has been debited from the electronic credit ledger for making payment of those tax, the officer shall provide Form GST PMT-03 by re-transferring the said amount as Input Tax Credit in electronic credit ledger.

4. Rules for refunds of Input Tax Credit under Section 54(3)

As per those invoices; refund of collected ITC shall be limited to the ITC, the details of which are uploaded by the supplier in Form GSTR-1 and are shown in the Form GSTR-2A of the applicant. Accordingly, circular views modified to that extent.

5. Obligation to point out HSN or SAC in annexure B

A transformed declaration is attached for applicants to upload the details of bills reflecting in their form GSTR 2A. The applicant beside the supplementary particulars already given, now obligated to state HSN or SAC code which is prescribed on the inward invoices. In cases where supplier is not obligated to state HSN or SAC code on bills the applicant need not mention HSN or SAC code in reverence of such inward supplies.

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