List of Procedures to File and Claim GST Refund

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  • Last Updated on 17 May, 2022

procedure to claim GST refund

Table of Contents

  1. Application to be Accompanied with Documentary Evidence
  2. Declaration/Certification
  3. Processing of Refund Claim
  4. Filing of Application for Claiming Refund in GST RFD-01
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1. Application to be Accompanied with Documentary Evidence

Section 54(4) of the GST Act, 2017 stipulates that the application for refund shall be accompanied by the documentary evidences as may be prescribed. The documentary evidences have been prescribed under Rule 89(2) of the GST Rules, 2017.

Rule Description Documentary Evidence
89(2)(a) Refund in case of Order passed by

    • Proper Officer
    • An appellate authority
    • Appellate Tribunal
    • Court
Reference No. of the Order [Passed by the authorities]
Copy of the Order [Passed by the authorities]
OR
Reference No. of Payment of amount specified in section 107(6)
Reference No. of Payment of amount specified in section 112(8)
89(2)(b) Refund on account of export of goods Statement containing the number & date of Shipping Bill/Bill of Export
Statement containing the number & date of relevant Export Invoices
89(2)(c) Refund on account of export of services Statement containing the number & date of Invoices
Statement containing the number & date of BRC/FIRC
89(2)(d) Refund on account of supply of goods made to SEZ unit/developer Statement containing the number & date of Invoices in Rule 46
Evidence regarding the endorsement specified in the 2nd proviso to Rule 89(1)
89(2)(f) If supplier claims refund – Then a Declaration to the effect that SEZ unit/developer has not availed ITC

However, now w.e.f. 1st February, 2019 said rule has been substituted vide Central Goods and Services Tax (Amendment) Rules, 2019 which requires a declaration to the effect that tax has not been collected from the SEZ unit or SEZ developer.

89(2)(e) Refund on account of supply of services made to SEZ unit/developer Statement containing the number & date of Invoices
Evidence regarding the endorsement specified in the 2nd proviso to Rule 89(1)
Details of payment along-with proof made by the recipient to the supplier for authorised operations as defined under the SEZ Act, 2005
89(2)(f) If supplier claims refund – Then a Declaration to the effect that SEZ unit/developer has not availed ITC However, now w.e.f. 1st February, 2019 said rule has been substituted vide Central Goods and Services Tax (Amendment) Rules, 2019 which requires a declaration to the effect that tax has not been collected from the SEZ unit or SEZ developer.
89(2)(g) Refund on account of Deemed Exports Statement containing the number & date of Invoices
Evidence as may be notified by the Government
89(2)(h) Refund on account of Inverted tax structure [Other than NIL rated or fully exempt supplies] Statement containing the number & date of Invoices received during a tax period
Statement containing the number & date of Invoices issued during a tax period
89(2)(i) Refund on account of finalisation of provisional assessment Reference Number of the Final Assessment Order
Copy of the Final Assessment Order
89(2)(j) Where CGST & SGST was paid but subsequently it was held that IGST shall be paid Statement showing details of such transactions
89(2)(k) Refund on account of excess payment of tax Statement showing details of the amount of claim

However, it is significant to note that CBIC vide Circular No. 125/44/2019– GST dated 18th November, 2019 has issued a detailed list of documentary evidence that is required to be filed with each type of refunds. For the ease of reference, each set of documentary evidence is incorporated in each chapter dealing with respective refunds.

2. Declaration/Certification

Section 54(4)(b) of the GST Act, 2017 requires the 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 to any other person.

In this respect, the proviso to the aforesaid section read with Rule 89(2)(l) and Rule 89(2)(m) of the GST Rules, 2017 has prescribed different provisions based on the quantum of claim of refund.

Description Refund Claim upto INR 2,00,000 Refund Claim exceeding INR 2,00,000
Rule 89(2)(l) 89(2)(m)
Requirement Declaration Certificate in Annexure 2 of Form GST RFD-01 issued by a Chartered Accountant or a Cost Accountant
Purpose of Declaration/Certificate Incidence of such tax and interest had not been passed on to any other person
Cases in which no requirement of Declaration/ Certificate Cases covered under clause (a) or clause (b) or clause (c) or clause (d) or clause (f) of sub-section (8) of section 54

(a)   refund of tax paid on (zero-rated supplies)* of goods or services or both or on inputs or input services used in making such zero-rated supplies

*Presently, under section 16(3) of IGST Act, only the supplier making supplies of goods and/or services to the SEZ unit/developer can claim refund. It is proposed to allow ITC to SEZ unit/developer and the supplier in DTA may charge the tax amount from such SEZ unit/developer. Accordingly, section 54(8)(a) has been amended which reads as ‘refund of tax paid on export of goods or services or both or on inputs or input services used in making such exports vide The Central Goods and Services Tax (Amendment) Act, 2018 with effect from 1st February, 2019.

Section 54(8) enumerates the type of refunds in which there is no requirement to check the principal of unjust enrichment. In other words, prior to the amendment, refund on the account of zero-rated supply could be applied by person without following the principal of unjust enrichment. But with the proposal of the Government to allow DTA unit to charge and recover the tax amount from SEZ Unit or SEZ Developer (i.e. now refund can be applied by both, obviously one of them will claim whosoever bears the tax burden), it becomes necessary in such case to prove unjust enrichment by the supplier for which this amendment has been brought. Hence, Government wants to apply principal of unjust enrichment on supply made to SEZ Unit or SEZ developer and therefore the refund of tax can now be claimed by the person bearing the tax burden, may it be DTA or SEZ Unit/developer. Accordingly, if a person supplying goods to SEZ unit/developer is applying for refund than a declaration in this regard shall be required that no tax has been collected from SEZ unit on account of such supply. It is worthwhile to note that corresponding changes have also been made in Forms GST RFD-01 and GST – RFD 01A.

(b)   refund of unutilised input tax credit under sub-section (3)

(c)   refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued

(d)   refund of tax in pursuance of section 77

(f)   the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify

Applicability of concept of unjust enrichment in GST

The Hon’ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. v. Commissioner of Central Excise & Customs as reported in 2005 (181) ELT 328 S.C. has defined ‘unjust enrichment’ as under:

(a)  ‘Unjust enrichment’ means retention of a benefit by a person that is unjust or inequitable. ‘Unjust enrichment’ occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else.

(b)  That no person can be allowed to enrich inequitably at the expense of another.

A right of recovery under the doctrine of ‘unjust enrichment’ arises where retention of a benefit is considered contrary to justice or against equity. The concept is inbuilt in section 54(5) read with section 54(8) of the CGST Act, 2017. Every claim of refund sanctioned will be credited to the Consumer Welfare Fund in terms of section 54(5) of CGST Act, 2017. It will, instead of being credited to the fund, be paid to the claimant in situations mentioned in Section 54(8). Thus, the principle will not apply to refund claims arising on account of exports, refund of accumulated ITC on account of exports and inverted rate structure, where wrong tax is paid (IGST instead of CGST+SGST & vice versa), where tax has been paid on advances but no supply is made and no invoice has been issued. These are cases where the principle of unjust enrichment is not applicable and the proper officer need not satisfy himself whether the incidence of tax has been passed on to any other person in such cases. In all other cases, refund will be sanctioned to the claimant only if the claimant demonstrates that the incidence of tax has not been passed on to any other person.

3. Processing of Refund Claim

As per section 54(5) of the GST Act, 2017, if, on receipt of any refund application, 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 Fund referred to in section 57.

Processing of claiming refund through GST RFD-01 with effect from 26th September, 2019

CBIC has clarified that as the necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26th September, 2019, therefore, a new set of procedures has been prescribed vide Master Circular No. 125/44/2019-GST dated 18th November, 2019.

The Master Circular has been prescribed in supersession of earlier Circulars viz. Circular No.

However, the provisions of the aforesaid Circulars shall continue to apply for all refund applications filed on the common portal before 26th September, 2019 and the said applications shall continue to be processed manually as prior to deployment of new system.

Linking of Aadhaar with refund

    • 37th GST Council meeting held on 20th September, 2019 has recommended to examine the possibility of making Aadhaar mandatory for claiming refunds.

In this regard, rule 89(1) has been amended vide Notification No. 35/2021 – Central Tax dated 24-9-2021,with effect from the date as may be notified, to give effect to the said proposal of making the Aadhaar authentication mandatory for claiming refunds by subjecting it to rule 10B. Rule 10B of the CGST Rules, 2017 stipulates that the registered person, other than a person notified under sub-section (6D) of section 25, who has been issued a certificate of registration under rule 10 shall, undergo authentication of the Aadhaar number of the proprietor, in the case of proprietorship firm, or of any partner, in the case of a partnership firm, or of the karta, in the case of a Hindu undivided family, or of the Managing Director or any whole time Director, in the case of a company, or of any of the Members of the Managing Committee of an Association of persons or body of individuals or a Society, or of the Trustee in the Board of Trustees, in the case of a Trust and of the authorized signatory, in order to be eligible for the purpose of filing refund application in Form GST RFD-01 under rule 89 of the CGST Rules, 2017. However, as per proviso to rule 10B, if Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents, namely:-

(a)  her/his Aadhaar Enrolment ID slip; and

(b)  (i) Bank passbook with photograph; or

(ii) Voter identity card issued by the Election Commission of India; or

(iii) Passport; or

(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988 (59 of 1988):

Provided further that such person shall undergo the authentication of Aadhaar number within a period of thirty days of the allotment of the Aadhaar number.]

4. Filing of Application for Claiming Refund in GST RFD-01

CBIC vide Master Circular No. 125/44/2019-GST dated 18th November, 2019 has clarified that:

    • Application to be filed on www.gst.gov.in: FORM GST RFD-01 shall be filled on the common portal by an applicant seeking refund under any of the categories mentioned below.

(a)  Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;

(b)  Refund of tax paid on export of services with payment of tax;

(c)  Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;

(d)  Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;

(e)  Refund of unutilized ITC on account of accumulation due to inverted tax structure;

(f)  Refund to supplier of tax paid on deemed export supplies;

(g)  Refund to recipient of tax paid on deemed export supplies;

(h)  Refund of excess balance in the electronic cash ledger;

(i)  Refund of excess payment of tax;

(j)  Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;

(k)  Refund on account of assessment/provisional assessment/appeal/any other order;

(l)  Refund on account of “any other” ground or reason.

    • All other statement, documents, etc. is integral part of GST RFD-01: The filing of FORM GST RFD-01 shall entail filing of statements/declarations/undertakings which are part of FORM GST RFD-01 itself, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim.
    • List of documents has been specified: A comprehensive list of such documents has been encapsulated in the Annexure-A of the Master Circular No. 125/44/2019-GST dated 18th November, 2019.
    • No other documents at the stage of filing: It has been clarified vide the same Circular that no other document needs to be provided by the applicant at the stage of filing of the refund application.
    • Facility to upload documents: The facility of uploading these other documents/invoices shall be available on the common portal where 4 documents, each of maximum 5MB, may be uploaded along with the refund application.
    • No requirement of physical submission of application: Neither the refund application in FORM GST RFD-01 nor any of the supporting documents shall be required to be physically submitted to the office of the jurisdictional proper officer.

Change in manner of claim as well as grant of refund of tax paid on supplies other than zero rated supplies

Sl. No. Category of refund Paid to Government using cash/credit balance Balance in Cash Ledger Balance in Credit Ledger Refund in
a. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax No No Yes Cash
b. Refund of tax paid on export of services with payment of tax Yes No No Though payment can be made using both cash & credit but refund shall be in Cash
c. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax No No Yes Cash
d. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax Yes No No Though payment can be made using both cash & credit but refund shall be in Cash
e. Refund of unutilized ITC on account of accumulation due to inverted tax structure No No Yes Cash
f. Refund to supplier of tax paid on deemed export supplies Yes No No Though payment can be made using both cash & credit but refund shall be in Cash
g. Refund to recipient of tax paid on deemed export supplies Yes No No Though payment can be made using both cash & credit but refund shall be in Cash
h. Refund of excess balance in the electronic cash ledger No Yes No Cash
i. Refund of excess payment of tax Yes No No Proportionately in the respective original mode of payment – Para 4 of Circular No. 135/05/2020 – GST dated 31st March, 2020.
j. Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa Yes No No
k. Refund on account of assessment/provisional assessment/appeal/any other order Yes No No
l. Refund on account of “any other” ground or reason.  Yes No No

For the refund of tax paid falling in categories specified at S. No. (i) to (l) above i.e. refund claims on supplies other than zero rated supplies, no separate debit of ITC from electronic credit ledger is required to be made by the applicant at the time of filing refund claim, being claim of tax already paid. However, the total tax would have been normally paid by the applicant by debiting tax amount from both electronic credit ledger and electronic cash ledger. At present, in these cases, the amount of admissible refund, is paid in cash even when such payment of tax or any part thereof, has been made through ITC.

In the personal view of the author, though there are other categories also like exports/supplies to SEZ unit or developer on payment of IGST and deemed exports where the payment can be made using both cash and credit but refund is granted wholly in Cash, the reason why proportionate refund in cash and credit has been done only for (i) to (l) categories because here artificial construction is possible to liquidate credit in cash by doing wrong payment, excess payment, etc. But in case of zero-rated supply, refund is in cash even though payment made through credit is to promote zero-rated supplies by having enough liquidity in hand.

As per CBIC as this could lead to allowing unintended encashment of credit balances, this issue has been engaging attention of the Government. Accordingly, vide Notification No.16/2020-Central Tax dated 23rd March, 2020, sub-rule (4A) has been inserted in rule 86 of the CGST Rules, 2017 which reads as under:

“(4A) Where a registered person has claimed refund of any amount paid as tax wrongly paid or paid in excess for which debit has been made from the electronic CREDIT ledger, the said amount, if found admissible, shall be re-credited to the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03.”

Further, vide the same notification, sub-rule (1A) has also been inserted in rule 92 of the CGST Rules, 2017. The same is reproduced hereunder:

“(1A)Where, upon examination of the application of refund of any amount paid as tax other than the refund of tax paid on zero-rated supplies or deemed export, the proper officer is satisfied that a refund under sub-section (5) of section 54 of the Act is due and payable to the applicant, he shall make an order in FORM RFD-06 sanctioning the amount of refund to be paid, in cash, proportionate to the amount debited in cash against the total amount paid for discharging tax liability for the relevant period, mentioning therein the amount adjusted against any outstanding demand under the Act or under any existing law and the balance amount refundable and for the remaining amount which has been debited from the electronic credit ledger for making payment of such tax, the proper officer shall issue FORM GST PMT-03 re-crediting the said amount as Input Tax Credit in electronic credit ledger.”

On perusal of the rule 92(1A), it appears that refund on account of inverted tax structure is also covered but it is not ideally so because in the inverted tax structure, the claim is of unutilized ITC for which separate debit entry is required to be made at the time of filing refund application, therefore, it is not covered under rule 92(1A). In the personal opinion of the author, it appears that there is an inadvertent error in drafting which may be soon rectified by the Government.

Accordingly, it has been clarified vide Para 4 of Circular No.135/05/2020 – GST dated 31st March, 2020 that the combined effect the abovementioned changes is that any such refund of tax paid on supplies other than zero rated supplies WILL NOW be admissible proportionately in the respective original mode of payment i.e. in cases of refund, where the tax to be refunded has been paid by debiting both electronic cash and credit ledgers (other than the refund of tax paid on zero-rated supplies or deemed export), the refund to be paid in cash and credit shall be calculated in the same proportion in which the cash and credit ledger has been debited for discharging the total tax liability for the relevant period for which application for refund has been filed. Such amount, shall be accordingly paid by issuance of order in FORM GST RFD-06 for amount refundable in cash and FORM GST PMT-03 to re-credit the amount attributable to credit as ITC in the electronic credit ledger.

Refund of unutilized input tax credit only on the strength of the invoices appearing in GSTR 2A i.e. refund allowed earlier even of 10% as per rule 36(4) has been removed – Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020 by modifying Para 36 of the Circular No. 125/44/2019-GST, dated 18th November, 2019.

Sl. No. Category of refund Paid to Government using cash/credit balance Balance in Cash Ledger Balance in Credit Ledger Applicability of refund of unutilized ITC
a. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax No No Yes Yes – Only if invoice appearing in GSTR 2A, no benefit of 10% under rule 36(4) vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020
b. Refund of tax paid on export of services with payment of tax Yes – If payment is made using ITC, Rule 36(4) is applicable. Such cases not covered vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020 No No No
c. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax No No Yes Yes – Only if invoice appearing in GSTR 2A, no benefit of 10% under rule  36(4) vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020
d. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax Yes – If payment is made using ITC, Rule 36(4) is applicable. Such cases not covered vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020 No No No
e. Refund of unutilized ITC on account of accumulation due to inverted tax structure No No Yes Yes – Only if invoice appearing in GSTR 2A, no benefit of 10% under rule 36(4) vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020
f. Refund to supplier of tax paid on deemed export supplies Yes – If payment is made using ITC, Rule 36(4) is applicable. Such cases not covered vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020 No No No
g. Refund to recipient of tax paid on deemed export supplies Yes – If payment is made using ITC, Rule 36(4) is applicable. Such cases not covered vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020 No No No
h. Refund of excess balance in the electronic cash ledger No Yes No No
i. Refund of excess payment of tax Yes – If payment is made using ITC, Rule 36(4) is applicable. Such cases not covered vide Para 5 of Circular No.135/05/2020 – GST dated 31st March, 2020 No No No
j. Refund of tax paid on intra-State supply which is subsequently held to be inter State supply and vice versa No No No
k. Refund on account of assessment/provisional assessment/appeal/any other order No No No
l. Refund on account of “any other” ground or reason. No No No

Functionality to withdraw Refund Application

The functionality to withdraw Refund Application filed by the taxpayer in given on GST Common Portal w.e.f. February, 2021 in Form GST RFD-01W until the Refund Processing Officer issues an acknowledgement in Form GST RFD-02 or a deficiency memo in Form GST RFD-03. Earlier the taxpayers had no option to withdraw their refund applications, if they have committed any mistakes, while filing the application. A functionality has now been implemented for the taxpayer, to withdraw an already filed refund application, by filing Form GST RFD-01W. The CGST Rules, 2017 may soon be amended to provide a provision for withdrawal of refund application and incorporate such form in said rules.

Pre login Tracking of Refund Application Status

From February, 2021, taxpayers can navigate to Services > Track Application Status > Select the Refund option > Enter ARN to track their refund application, without logging into the GST Portal. This will display various stages of Refund application filed by them, with the current status of their application in green colour and remaining pending stages being greyed out.

Enabling taxpayers/applicants with (only) TRN, to manually enter bank account details in Refund Application in Form GST RFD-01

So far the taxpayers/applicants having (only) TRN were unable to file an application for refund, as they were not allowed to enter or add bank account details in the Registration Module. To enable filing of Refund Application by such taxpayers/applicants, a facility has been made available to them for manual entry of bank account details in Form GST RFD-01, while filing an application for refund.

Disclaimer: The content/information published on the website is only for general information of the user and shall not be construed as legal advice. While the Taxmann has exercised reasonable efforts to ensure the veracity of information/content published, Taxmann shall be under no liability in any manner whatsoever for incorrect information, if any.

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