Seeks to clarify certain refund related issues under GST. Rescinded vide Circular No. 125/44/2019 – GST dated 18.11.2019.

Circular No.: 94/13/2019-GST
Date of Circular: 28th March 2019
Relevant Sections and Rules:

• CGST Act, 2017:
  • Section 50(1): Interest on delayed payment
  • Section 168(1): Power to issue instructions
• CGST Rules, 2017:
  • Rule 89(5): Refund on account of inverted duty structure
  • Rule 89(4B): Refund under zero-rated supplies with concessional rate
• Notifications Referenced:
  • Notification No. 20/2018-Central Tax (Rate) dated 26.07.2018
  • Notification Nos. 40/2017-CT(R) and 41/2017-IGST(R) dated 23.10.2017
• Circulars Referenced: Circular Nos. 56/30/2018, 59/33/2018, 70/44/2018

Summary of Circular:

This circular clarifies several key refund-related issues under GST, particularly concerning inverted duty structure, merchant exporters, and deficiency memo cases.

1. Refund Where ITC Was Reversed Due to Notification 20/2018:

• Taxpayers who reversed ITC in GSTR-3B (Aug 2018 or later) due to Notification 20/2018 can:
  • File refund claim under category “Any Other” (instead of inverted tax structure).
  • Proper officer will compute eligible refund as per Rule 89(5).
  • Upon satisfaction, officer will ask taxpayer to debit ledger via DRC-03, then issue RFD-06 & RFD-05.

2. Reversal by Taxpayers Yet to Reverse ITC:

• If reversal hasn’t been made yet, it may now be done via FORM DRC-03 (not GSTR-3B).

3. Late Reversal of ITC and Interest:

• If reversal is made after due date of Aug 2018 return, taxpayer must pay interest under Section 50(1) from due date till actual reversal date.
• Refund eligibility for inverted structure starts only after ITC reversal and interest payment.

4. Refund for Merchant Exporters (Rule 89(4B)):

• If supplier to merchant exporter availed concessional rate benefit under Notification 40/2017-CT(R) or 41/2017-IGST(R):
  • Merchant exporter may claim refund under Rule 89(4B) using category “Any Other”.
  • All supporting documents applicable for exports without payment must be attached.
  • Process: Officer verifies, asks for DRC-03 debit, then issues RFD-06 and RFD-05.

5. Deficiency Memo and Re-Credit Correction:

• Previously, re-credit via RFD-01B was advised after deficiency memo.
• Later clarified (via Circular 70/44/2018) that re-credit should not occur.
• For such already re-credited cases:
  • Taxpayer should resubmit refund application under same ARN.
  • After scrutiny, officer will request DRC-03 debit, then process refund.

Source: Circular No.: 94/13/2019-GST