Circular clarifying issues in respect of challenges faced by registered persons in implementation of provisions of GST issued – Reg

Circular No.: 137/07/2020-GST
Date of Circular: 13th April 2020
Relevant Sections and Rules:

• CGST Act, 2017:
  • Sections 31(2), 31(3)(e), 34, 51, 54(1), 168(1)
• CGST Rules, 2017:
  • Rule 51 (Refund Voucher)
• IGST Act, 2017:
  • Section 16 (Zero-rated supply)
• Notifications Referenced:
  • Notification No. 35/2020–Central Tax dated 03.04.2020
  • Notification No. 37/2017–Central Tax dated 04.10.2017

Summary of Clarifications Provided:

1. Advance Received for Cancelled Services – Invoice Issued:

• If GST was paid on advance and invoice was issued for a service that was later cancelled:
  • Supplier must issue a credit note under Section 34.
  • Tax liability should be adjusted in returns.
  • If no output liability to adjust against, file refund under “Excess payment of tax” via FORM GST RFD-01.

2. Advance Received for Cancelled Services – Only Receipt Voucher Issued:

• If GST was paid on advance and only receipt voucher was issued (no invoice):
  • Issue a refund voucher under Section 31(3)(e).
  • Claim refund via FORM GST RFD-01 under “Excess payment of tax”.

3. Goods Returned by Recipient:

• Where tax invoice was issued and goods were returned:
  • Supplier to issue credit note under Section 34.
  • Adjust tax in return.
  • If no output tax liability to adjust, claim refund via FORM GST RFD-01.

4. Expired LUT for Zero-Rated Supplies:

• If LUT (Letter of Undertaking) for FY 2019–20 expired on 31.03.2020:
  • As per Notification 35/2020, LUT filing extended till 30.06.2020.
  • Taxpayer may continue to make zero-rated supplies without payment of tax, quoting FY 2019–20 LUT reference, provided RFD-11 for FY 2020–21 is filed by 30.06.2020.

5. TDS (Section 51) Deposit Timeline:

• For tax deducted under Section 51 between 20.03.2020 to 29.06.2020:
  • Return in FORM GSTR-7 and tax deposit deadline extended till 30.06.2020.
  • No interest under Section 50 if paid by then.

6. Refund Application Deadline Extension:

• If the two-year limit under Section 54(1) for filing refund expired between 20.03.2020 and 29.06.2020:
  • Deadline extended till 30.06.2020 under Notification 35/2020.

Source: Circular No.: 137/07/2020-GST