Manner of filing refund of unutilized ITC on account of export of electricity.

Circular No.: 175/07/2022-GST
Date of Circular: 6th July 2022
Relevant Sections and Rules:

• CGST Act, 2017:
  • Section 54(3): Refund of unutilised input tax credit
  • Section 168(1): Power to issue instructions
• CGST Rules, 2017:
  • Rule 89(2)(ba): Documentary requirements for export of electricity
  • Rule 89(4): Refund formula for zero-rated supplies
• Notification Referenced:
  • Notification No. 14/2022–CT dated 05.07.2022 (introducing Statement 3B in RFD-01)

Summary of Clarifications Provided:

1. New Procedure for Refund of Unutilised ITC on Export of Electricity:
   Electricity, though classified as “goods”, does not involve shipping bills like other goods. Due to this, power generators faced issues in claiming refund of accumulated ITC on zero-rated exports. To address this, clause (ba) in Rule 89(2) and a new Statement 3B in FORM RFD-01 have been introduced.
   Refund applications must be filed under the “Any Other” category in FORM GST RFD-01 until system changes are implemented. The remark “Export of electricity – without payment of tax (accumulated ITC)” must be entered.
2. Required Documentation for Refund Application:
   Applicants must upload:

• Statement 3B (invoice-wise export details and tariff)
• Statement of scheduled energy export (Annexure-I) issued under CERC regulations
• Tariff agreements
• Refund calculation in Statement 3A (in PDF)

3. Relevant Date for Refund Limitation Period:
   Since electricity is exported continuously and not through ports, the relevant date for the 2-year limitation under Section 54(1) is deemed to be the last date of the month in which export occurred, as per the Regional Energy Account (REA) issued by Regional Power Committee (RPC) under CERC regulations.
4. Refund Calculation and Verification by Proper Officer:

• Refund is to be calculated using Rule 89(4)’s formula for zero-rated supplies.
• Export turnover of electricity = Quantity exported (as per REA) × tariff (as per agreement).
• If discrepancy exists between REA and invoice quantity, the lower of the two shall be used.
• Domestic electricity turnover is excluded from “Adjusted Total Turnover” since it is exempt.
• Officer must ensure that no ITC is claimed on domestic supply inputs.

5. Process Flow:
   Upon verifying completeness, if refund is admissible, the proper officer shall ask the taxpayer to debit the eligible amount from the credit ledger via FORM GST DRC-03. On receiving proof, the refund will be sanctioned through FORM RFD-06 and payment order RFD-05.

Source: Circular No.: 175/07/2022-GST