Refund of unutilized input tax credit :
Subject to the provisions of section 54(10), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period – section 54(3) of CGST Act.
[section 54(10) provides for recovery of any penalty, tax or interest from any refund due].
No refund of unutilized input tax credit shall be allowed in cases other than exports including zero rated supplies or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, other than nil rated or fully exempt supplies – first proviso to section 54(3) of CGST Act.
No refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty – second proviso to section 54(3) of CGST Act.
No refund of input tax credit shall be allowed if the supplier of goods or services avails duty drawback of CGST/SGST/UTGST or claims refund of IGST paid on such supplies – third proviso to section 54(3) of CGST Act.
Drawback – “Drawback” in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on any imported inputs or on any domestic inputs or input services used in the manufacture of such goods – section 2(42) of CGST Act. Refund only in case of (a) exports and supplies to SEZ (b) inverted rate structure – Refund will be admissible only in case of physical exports and supplied to SEZ. Provision of ‘deemed export’ has been made in CGST Act. However, there is no specific provision of refund in case of deemed exports or supplies to EOU.
Refund is admissible if GST rate on inputs is higher that GST rate of output supplied. However, refund is not available in cases were supply is exempted or nil rated – first proviso to section 54 of CGST Act.
Sanctioning 90% of claim on provisional basis in case of exports – Notwithstanding anything contained in section 54(5) [which states that refund should be credited to Consumer Welfare Fund], the proper officer may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government, on the recommendations of the Council, refund on a provisional basis, ninety per cent. of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under section 54(5) for final settlement of the refund claim after due verification of documents furnished by the applicant – section 54(6) of CGST Act.