Circular on Clarification on refund related issues – Reg

Circular No.: 135/05/2020-GST
Date of Circular: 31st March 2020
Relevant Sections and Rules:

• CGST Act, 2017:
  • Sections 16, 54(3), 168(1)
• IGST Act, 2017:
  • Section 16(3)
• CGST Rules, 2017:
  • Rules 36(4), 86(4A), 92(1A)
• Referenced Circulars:
  • Circular No. 125/44/2019-GST
  • Circular No. 37/11/2018-GST
• Notifications:
  • Notification No. 16/2020-CT dated 23.03.2020
  • Notification No. 49/2019-CT dated 09.10.2019

Summary of Clarifications Issued in Circular 135/05/2020-GST:

1. Clubbing of Refund Claims Across Financial Years:

• Previous restriction disallowing refund claims across financial years (para 8 of Circular 125/44/2019) is now withdrawn.
• Registered persons can now club refund claims across different financial years.
• Aligned with Delhi High Court’s ruling in M/s Pitambra Books Pvt. Ltd.

2. Refund Not Allowed on Same Goods with Rate Reduction:

• Refund of unutilized ITC due to inverted duty structure is not allowed if accumulation is caused by a change in GST rate on the same goods.
• Input and output being the same goods with different rates over time is not eligible for refund under Section 54(3)(ii).

3. Manner of Refund – Supplies Other Than Zero-Rated:

• For refund claims under categories (i) to (l) of Circular 125/44/2019 (e.g., excess tax, intra/inter supply corrections, appeal orders), refund must:
  • Be issued in proportion to tax paid in cash and credit.
  • Cash component refunded via RFD-06, and
  • Credit component re-credited to ITC ledger via PMT-03.

4. ITC Refund Restricted to GSTR-2A Reflections:

• Refund of unutilized ITC under Section 54(3) is restricted to ITC available in GSTR-2A.
• Amendment to Para 36 of Circular 125/44/2019:
  • Refund cannot be claimed on invoices not reflected in GSTR-2A, regardless of invoice copy availability.

5. HSN/SAC Requirement in Refund Annexure-B:

• Modified Annexure-B requires applicants to include HSN/SAC codes for each inward supply.
• Not mandatory where supplier is not required to report HSN/SAC on invoice.
• Aimed at distinguishing inputs, input services, and capital goods to ensure refund eligibility compliance.

Source: Circular No.: 135/05/2020-GST