Highlights of Recent CBIC Circulars issued on 11.07.2024 on Corporate Guarantees, Outstanding Dues Recovery, and Refund Procedures: PART 2

On July 11, 2024, the Central Board of Indirect Taxes and Customs (CBIC) released several Circulars to implement recommendations from the 53rd GST Council Meeting held on June 22, 2024. These Circulars provide clarity on various issues, including the recovery of outstanding dues, adjustments for pre-deposits under the CGST Act, the taxability and valuation of corporate guarantees, and refund procedures for additional IGST paid due to post-export price revisions and tax paid on inward supplies for the Canteen Stores Department (CSD).

Summary of Circulars:

C. Circular No. 226/20/2024-GST: Refund of Additional IGST Due to Upward Price Revisions

This Circular assist exporters in claiming refunds for additional IGST paid due to upward price revisions post-export.

Key Points:

• Purpose:

• To provide guidelines for exporters to claim refunds for additional IGST paid due to upward price revisions after the export of goods.

• Filing of Refund Application:

• Exporters can file refund applications electronically in FORM GST RFD-01 on the common portal.

• Until a separate category for these refunds is developed on the portal, exporters should file under the category “Any other” with remarks specifying “Refund of additional IGST paid on account of increase in price subsequent to export of goods”.

• Required Documentation:

• Copy of the shipping bill or bill of exports.

• Copy of original invoices.

• Copy of the contract or other documents indicating the requirement for the price revision.

• Copy of original invoices and relevant debit notes/supplementary invoices.

• Proof of payment of additional IGST and applicable interest.

• Proof of receipt of additional foreign exchange remittance (FIRC).

• A certificate from a practising chartered accountant or cost accountant certifying the additional foreign exchange remittance.

• Statement 9A and 9B of FORM GST RFD-01.

• Minimum Refund Amount:

• No refund will be processed for amounts less than one thousand rupees.

• Time Limit for Filing Refund:

• Refund applications must be filed within two years from the relevant date, as per clause (a) of Explanation (2) of section 54 of the CGST Act.

• For cases where the relevant date was before the introduction of sub-rule (1B) of rule 89, the application can be filed within two years from the date the sub-rule came into force.

• Processing the Refund Application:

• The officer will verify the completeness and eligibility of the application.

• Ensure that the exporter has duly reported the details of the export invoice and debit note in FORM GSTR-1 and has paid the additional IGST and interest in FORM GSTR-3B.

• Verify the revised value declared by the exporter and the details of foreign exchange remittances received.

• If the officer is satisfied, they will issue the refund sanction order in FORM GST RFD-06 and the payment order in FORM GST RFD-05. A detailed speaking order will be uploaded along with the refund sanction order.

• Downward Revision in Price:

• In cases of downward price revision of goods exported with IGST payment, the exporter must deposit the refund of the IGST received in proportion to the price reduction, along with applicable interest.

• The proper officer will verify the deposit of excess refund amounts during the relevant tax period when processing new refund applications.

Extracts of rule 89(1B) is reproduced as under-

“(1B) Any person, claiming refund of additional integrated tax paid on account of upward revision in price of the goods subsequent to exports, and on which the refund of integrated tax paid at the time of export of such goods has already been sanctioned as per rule 96, may file an application for such refund of additional integrated tax paid, electronically in FORM GST RFD-01 through the common portal, subject to the provisions of rule 10B, before the expiry of two years from the relevant date as per clause (a) of Explanation (2) of section 54:

Provided that the said application for refund can, in cases where the relevant date as per clause (a) of Explanation (2) of section 54 of the Act was before the date on which this sub-rule comes into force, be filed before the expiry of two years from the date on which this sub-rule comes into force.”

Clause (a) of Explanation (2) of section 54 is also reproduced as under-

“(2) "relevant date" means—

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,—

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;” 

D. Circular No. 227/21/2024-GST: Refund of Tax on Inward Supplies for Canteen Stores Department (CSD)

1. Purpose:

• To provide guidelines for the Canteen Stores Department (CSD) to claim refunds of tax paid on inward supplies.

2. Eligibility for Refund:

• The CSD is entitled to claim a refund of fifty percent of the applicable central tax, integrated tax, and Union territory tax paid on all inward supplies of goods received for subsequent supply to its Unit Run Canteens or authorized customers.

• The refund is available only if the inward supplies were received from a registered person against a tax invoice, and the supplier must have furnished their return in FORM GSTR-3B for the concerned tax period.

3. Filing of Refund Application:

• The CSD shall file an application for refund in FORM GST RFD-10A electronically on the common portal.

• The application will be processed electronically.

4. Manual Applications:

• Applications filed manually before the amendments in CGST Rules and before the electronic functionality was available will continue to be processed manually as per the earlier circular.

5. Documentation Required:

• An undertaking stating that the goods for which the refund is claimed have been received by the CSD for subsequent supply.

• A declaration that no refund has been claimed earlier against the invoices on which the refund is being claimed.

6. Time Limit for Filing Refund:

• The CSD must file the refund application before the expiry of two years from the last day of the quarter in which the supply was received.

7.Processing and Sanction of Refund:

• The proper officer will process the refund claim filed by the CSD similarly to claims filed in FORM GST RFD-01 under rule 89 of the CGST Rules.

• The officer will validate the GSTIN details of the CSD to ensure all returns in FORM GSTR-1 and FORM GSTR-3B due before the date of the refund application have been filed.

• The officer will verify that the details of the invoices for which the refund is claimed have been furnished by the supplier in FORM GSTR-1 and that the supplier has filed their return in FORM GSTR-3B for the concerned tax period.

8.Sanction Amount:

• The refund sanctioned will not exceed fifty percent of the central tax, state tax, Union territory tax, and integrated tax paid on the supplies received by the CSD.

• Invoices uploaded by the CSD while filing will be validated on the portal with FORM GSTR-2B.

• Only validated invoices will be allowed for refund, and invoices for which the refund has already been availed will be flagged and not allowed for refund.

• The Table in Sl. No. 7 of FORM GST RFD-10A will be auto-populated based on fifty percent of the respective tax amounts and will be editable downwards but not upwards.

9. Verification of ITC Reversal:

• The officer will verify whether the ITC on inward supplies of goods received for subsequent supply to Unit Run Canteens or authorized customers has been reversed by the CSD as clarified in Circular No. 170/02/2022-GST dated July 6, 2022.

10. Issuance of Refund Order:

• The officer will scrutinize the application for completeness and eligibility and issue the refund order in FORM GST RFD-06 accordingly.

A detailed speaking order will be uploaded along with the refund order in FORM GST RFD-06.