REFUND PROVISIONS IN MODEL GST LAW :

Chapter X Sections 38 to 41 of Model GST Law deals with refund Provisions. For the purposes of this section “refund” includes refund of tax on goods and/or services exported out of India or on inputs or input services used in the goods and/or services which are exported out of India, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilized input tax credit as provided under sub-section(2) of Section 38.

• Any person claiming refund of any tax and interest may make an application to the proper Officer of IGST/CGST/SGST before the expiry of two years from the relevant date in such form and in such manner as may be prescribed. Provided that the limitation period of two years shall not apply in cases where the amount referred above has been paid under protest.

• A taxable person may claim refund of any unutilized input tax credit at the end of any tax period.

• No refund of unutilized ITC shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs.GST (Sec.38(2))

• No refund of unutilized ITC in cases where the goods are exported out of India are subjected to export duty.

• The Refund application shall be accompanied by :

o documentary evidence as may be prescribed to establish that a refund is due.

o Such documentary or other evidence as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was
collected from, or paid by, him and the incidence of such tax and interest had not been passed on by him to any other person.

o If the amount claimed is less than five lakh rupees, he may file a declaration, based on the documentary and other evidences with him, certifying that the incidence of such tax and interest had not been passed on by him to any other person.

 

• If the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Consumer Welfare Fund. The proper Officer shall issue the order within ninety days from the date of receipt of application ( ie. complete application containing all information as may be prescribed). CGST Sec.38(4)& 38(5).

• In case of any claim for refund on account of export of goods and /services made by such category of registered taxable persons as may be notified in this behalf, refund eighty percent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, on a provisional basis, subject to such conditions, limitations and safeguards and the remaining twenty percent may be refunded after due verification of documents furnished by the applicant. GST Sec.38(4A)

• Notwithstanding anything contained in sub section (4) or (4A), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant if such amount is relatable to (a) refund of tax on goods and /or services exported out of India or on inputs used in the goods and/or services which are exported out of India (b) refund of unutilized ITC under sub section (2) ,(c) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person and (d) the tax or interest borne by such other class of applicants as the Central/State Government may on the recommendation of the Council, by notification, specify. CGST Sec.38(6).

• Notwithstanding anything to the contrary contained in any judgment, decree, order ordirection of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except as provided in sub-section (6) (GST 38(7).

• Notwithstanding anything contained in sub-section (2), where any refund is due underthe said sub-section to a registered taxable person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any Court, Tribunal or Appellate Authority by the specified date, the proper officer may —

(a) withhold payment of refund due until the said person has submitted the return or paid the tax, interest or penalty, as the case may be;

(b) deduct from the refund due, any tax, interest or penalty which the taxable person is liable to pay but which remains unpaid.(GST.Sec.38(8))

• Notwithstanding anything contained in sub-section (4) or sub-section (4A), where an order giving rise to a refund is the subject matter of an appeal or further proceeding or where any other proceeding under this Act is pending and the Commissioner / Board is of the opinion that grant of such refund is likely to adversely affect the revenue, he may, after giving the taxpayer an opportunity of being heard, withhold the refund till such time as he may determine. If such withheld is made, the taxable person shall be entitled to interest as provided under section 39, if as a result of the appeal or further proceeding he becomes entitled to refund.(GST Sec.38(9) and (10)).

• Notwithstanding anything contained in this section, no refund under sub-section (4) or sub-section (4A) shall be paid to an applicant if the amount is less than rupees one thousand.(Sec.38(11).

• The United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947),Consulate or Embassy of foreign countries and any other person or class of persons as may be notified by the Board / Commissioner, shall obtain a Unique Identity Number, in the manner prescribed, for the purpose(s) notified, including refund of taxes on the supplies of goods and/or services received by them. GST Sec.19(6).

• Tax wrongfully collected and deposited with the Central or State Government. A taxable person who has paid IGST considering to be an Interstate supply, but which subsequently held to be an intra state supply, upon payment of CGST and SGST in the appropriate State, be allowed to take the amount of IGST so paid as refund subject to provisions of sec.38 of the CGST Act and other prescribed conditions. IGST Sec.30and Sec.53 GST.

• Pending refund claims to be disposed of under earlier law. Every claim for refund of any duty/tax and interest, if any, paid on such duty/tax or any other amount, filed by any person before the appointed day, shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of earlier law other than the provisions of subsection(2) of section 11B of the Central Excise Act, 1944 (1 of 1944): Provided that where any claim for refund is fully or partially rejected, the amount so rejected shall lapse. (Chapter XXV.Transitional Provisions CGST Sec.154 (Central Law)) Similarly,every claim for refund of any tax and interest, if any, paid on such tax or any other amount, filed by any person before the appointed day, shall be disposed of in accordance with the provisions of earlier law and any amount eventually accruing to him shall be refunded to him in accordance with the provisions of the said law: Provided that where any claim for refund is fully or partially rejected, the amount so rejected shall lapse.(Chapter XXV.Transitional Provisions GST Sec.154 (State Law))

• Every proceeding of appeal, revision, review or reference relating to any output duty liability initiated before the appointed day, shall be disposed of in accordance with the provisions of the earlier law, and any amount found to be admissible tothe claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of earlier law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944and shall not be admissible as input tax credit under this Act. (Chapter XXV.Transitional Provisions GST Sec.155). Similarly, every proceeding of appeal, revision, review or reference relating to any output tax liability initiated before the appointed day, shall be disposed of in accordance with the provisions of the earlier law, and any amount found to be admissible to the claimant shall be refunded to him in accordance with the provisions of the earlier law and shall not be admissible as input tax credit under this Act.(Chapter XXV.Transitional Provisions GST Sec.155).

• Every proceeding of appeal, revision, review or reference relating to any output duty liability initiated before the appointed day, shall be disposed of in accordance with the provisions of the earlier law, and any amount found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of earlier law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944and shall not be admissible as input tax credit under this Act.(Chapter XXV. Transitional Provisions GST Sec.156). Similarly, Every proceeding of appeal, revision, review or reference relating to anyoutput tax liability initiated before the appointed day, shall be disposed of in accordance with the provisions of the earlier law, and any amount found to be admissible to the claimant shall be refunded to him in accordance with the provisions of the earlier law and shall not be admissible as input tax credit under this Act.

Where in pursuance of an assessment or adjudication proceedings instituted, whether before or after the appointed day, under the earlier law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the earlier law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944.(Chapter XXV.Transitional Provisions GST Sec.157) Similarly, Where in pursuance of an assessment proceedings instituted, whether before or after the appointed day, under the earlier law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in accordance with the provisions of earlier law.(Chapter XXV.Transitional Provisions GST Sec.157)

Where any return, furnished under the earlier law, is revised and if, pursuant to such revision, any amount is found to be refundable to any taxable person, the same shall be refunded to him in cash under the earlier law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (Chapter XXV.Transitional Provisions GST Sec.158). Similarly, Where any return, furnished under the earlier law, is revised and if, pursuant to such revision, any amount is found to be refundable to any taxable person, the amount shall be refunded to the said person in accordance with the provisions of the earlier law(Chapter XXV.Transitional Provisions GST Sec.158).

• The amount of refund , under the provisions of the Act shall be rounded off to the nearest rupee and, for this purpose, where such amount contains a part of a rupee consisting of paise then, if such part is fifty paise or more, it shall be increased to one rupee and if such part is less than fifty paise it shall be ignored.(Sec.137 CGST Act)

• Where an amount deposited by the appellant with regard to filing of appeals before the First appellate authority or before the Appellate Tribunal is required to be refunded consequent to any order of the First Appellate Authority or of the Appellate Tribunal, as the case may be, interest at the rate specified under section 39 shall be payable in respect of such refund from the date of payment of the amount till the date of refund of such amount.(Sec.85 of CGST Act).

• Interest on delayed refunds :If any tax refundable under section 38 to any applicant is not refunded within three months from the date of receipt of application under sub-section (1) of that section, interest at such rate as may be specified in the notification issued by the Central or a State Government on the recommendation of the Council shall be payable in respect of such refund from the date immediately after the expiry of the due date for sanction of refund under section 38 till the date of refund of such tax.