SOP - Standard Operating Procedure for IGST Refund
On 23rd January 2020, the Central Board of Indirect Taxes and Customs (CBIC) have published Circular No.131/1/2020-GST regarding the Standard Operating Procedure (SOP). This new process is for those exporters whose refund has been stuck due to alerts in IGST refund at custom.
In June 2018, the CBIC has drawn attention to fraudulent ITC claims using ineligible documents and subsequent utilization of the credit for the purpose of payment of IGST exports.
In addition, there were notable modifications between the FOB value declared in the Shipping Bill and the Taxable Value declared in the GST returns, with the intent of higher IGST payment using the utilization of available credit.
To restrain these practices, the CBIC has issued Circular No. 16/2019-Customs dated 17 June 2019 introducing additional verification of issue of IGST refunds on the export of goods with payment of taxes.
CBIC has recognized more than 5000 exporters under the same categories. They have set cautions on IGST Refund of those fake cases.
In most of the cases, the CBIC has noticed that ineligible IGST refund claims were from the past few months. At the time of verification, they could not find the extent of such exporters. Moreover, in most of these cases, the Input Tax Credit (ITC) claims were on the basis of fake invoices.
Standard Operating Procedure to Fasten the verification process
CBIC has prescribed the following procedure,
- CBIC has taken some course of action and decided to run a strict parameter-based rigorous checking process. They had taken the decision to use different data analytics and AI tools under the Standard Operating Procedure. In case any doubtful exporters found, they will take them up for further verification. Until the scrutinized field report of concerned cases come up, CBIC will keep the refund procedure of those exporters in suspension. In addition to that, certain cases are subject to a 100% examination at the customs port.
- Jurisdiction CGST office must take 14 days maximum to furnish the verification process, once the exporter gives all the information. If the verification does not complete within this period, the jurisdiction CGST officer will inform it through a notice as a part of the Standard Operating Procedure to the nodal cell of the Chief Commissioner Office.
- The exporter can also ask the matter to the Chief Commissioner/ Jurisdictional Pr. Chief Commissioner of Central Tax if the verification process didn’t get completed within 14 working days. The exporter should send an email to the IDs of jurisdictional Chief Commissioners [provided in Annexure B], mentioning all in detail.
- After that, the jurisdictional Chief Commissioner/Pr. Chief Commissioner must take the required action. They need to finish the pending verification process within the next 7 working days.
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