Circular No.: 125/44/2019 – GST
Date of Circular: 18th November, 2019
Relevant Sections and Rules:
- Sections: 16, 54, 56, 73, 74, 168 of CGST Act; Section 11(2) of Cess Act; Section 16 of IGST Act
- Rules: Rule 89, Rule 90, Rule 91, Rule 92, Rule 96, Rule 96A, Rule 36(4), Rule 142
- Notifications/Circulars Superseded: Circular Nos. 17/17/2017, 24/24/2017, 37/11/2018, 45/19/2018, 59/33/2018, 70/44/2018, 79/53/2018, 94/13/2019
Summary of Circular 125/44/2019 – GST
- Full Electronic Refund Process via FORM GST RFD-01:
From 26.09.2019, all stages of GST refund filing and processing shall be conducted electronically through FORM GST RFD-01. Applications for various refund types (exports, SEZ supplies, inverted duty, excess cash, etc.) will no longer require physical submission. ARN will mark the filing date, and refund applications will be forwarded to proper officers electronically. - Deficiency Memo and Re-credit Mechanism:
If deficiencies are found, a deficiency memo (FORM GST RFD-03) will be issued within 15 days. Upon such issuance, the refund will not be processed, and a fresh application is required. Automatically, the debited amount in credit/cash ledger is re-credited. - Provisional Refund Clarification:
Even if a refund application appears partially inadmissible, 90% of the admissible amount may be sanctioned provisionally. The balance is settled in final order (RFD-06). Over-refunded amounts are recovered under Sec. 73/74 via FORM GST DRC-07. - Re-credit on Rejection of Refund:
Where refund is rejected (e.g., for ineligible ITC), recovery proceedings under Sec. 73/74 are applicable. Refund will only be re-credited upon an undertaking of no appeal or final rejection of appeal. - Export Refund Error Rectification (Table 3.1a vs. 3.1b):
Refunds for periods 01.07.2017 to 30.06.2019 can be filed even if zero-rated supply was declared in wrong columns of GSTR-3B (i.e., 3.1(a) instead of 3.1(b)). - Single Authority Refund Disbursement:
Refunds will be disbursed by the authority to whom the taxpayer is assigned (Central/State). The same authority will issue sanction and payment orders under all tax heads. - Supporting Documents and Declaration:
Comprehensive lists (Annexure-A & B) provide the required declarations, statements, and documentary proofs for each refund type. Only four documents (max 5 MB each) can be uploaded online. - Compensation Cess Refunds:
Refund of unutilized compensation cess credit is admissible even if the final product (e.g., aluminium) is not subject to cess but uses cess-liable inputs (e.g., coal). - Deemed Export Refunds:
Supplier or recipient can claim refund on deemed exports with respective undertakings. EOUs and other specified units must follow Circular 14/14/2017-GST protocol. - Merchant Exporter Refunds (0.05%/0.1% cases):
Refund to merchant exporters procuring at concessional rate under Notifications 40/2017 & 41/2017 should be claimed under “Any Other” category, and ledger debit via DRC-03 is required. - Transitional Credit Not Refundable:
Transitional credit from pre-GST laws (e.g., Central Excise) is not included in “Net ITC” for the purpose of refund under inverted duty or exports. - ITC Refund for Inputs with Differential GST Rates:
All inputs, even if taxed at same or lower rate than output, are eligible for inclusion in Net ITC under inverted duty refund. - Other Refund Issues Clarified:
Includes acceptance of delayed LUT filings, rejection grounds for compensation cess, eligibility of stores/spares/packing materials as input, and refund for TDS/TCS errors. - Interest for Delay in Refunds:
Refund must be completed within 60 days of ARN generation; else interest @6% is payable from 61st day till actual disbursement. - Refund for Export under LUT without Timely Export:
Zero-rating benefit will not be denied if export occurred albeit after 3 months; post-facto LUT acceptance is permitted.
Source: Circular No.: 125/44/2019 – GST
