Gujarat Government’s Clarification on certain issues related to Refund

Oct 31, 2018 | by Avantis RegTech Legal Research Team


The Government of Gujarat had received representations seeking clarification on certain issues relating to refund. In order to clarify the issues and to ensure uniformity in the implementation of the provisions of law across the field formations, the Government of Gujarat, on October 26, 2018, has clarified the issues as detailed hereunder:

·         Status of refund claim after issuance of deficiency memo and re-credit of electronic credit ledger:

a.       Para 7.1of circular No. 59/2018 dated September 26, 2018 clarifies the intent of law in cases where a deficiency memo is issued in respect of a refund claim. In para 7.2 of the said circular, the practise being followed in the field formations was elaborated and it was clarified that show cause notices are not required to be issued (and consequently no orders are required to be issued in FORM GST RFD-04/06) in cases where refund application is not resubmitted after the issuance of a deficiency memo (in FORM GST RFD-03). It was also clarified that once a deficiency memo has been issued against an application for refund, the amount of Input Tax Credit debited under sub-rule (3) of rule 89 which specifies the procedure regarding the application for refund of tax, interest, penalty, fees or any other amount of the Gujarat Goods and Services Tax Rules, 2017  is required to be recredited to the electronic credit ledger of the applicant by using FORM GST RFD-01B and the taxpayer is expected to file a fresh application for refund.

b.      The issue has been re-examined and it has been observed by the Government of Gujarat that presently the common portal does not allow a taxpayer to file a fresh application for refund once a deficiency memo has been issued against an earlier refund application for the same period. Therefore, it is clarified that till the time such facility is developed, taxpayers would be required to submit the rectified refund application under the earlier Application Reference Number (ARN) only. Thus, it is reiterated that when a deficiency memo in FORM GST RFD-03 is issued to taxpayers, re-credit in the electronic credit ledger (using FORM GST RFD-01B) is not required to be carried out and the rectified refund application would be accepted by the jurisdictional tax authorities with the earlier ARN itself. It is further clarified that a suitable clarification would be issued separately for cases in which such re-credit has already been carried out.

·         Allowing exporters who have received capital goods under Export Promotion Capital Goods (EPCG) to claim refund of IGST paid on exports:

a.       Sub-rule (10) of Rule 96 of the Gujarat Goods and Services Tax Rules, 2017, restricts exporters from availing the facility of claiming refund of IGST paid on exports in certain scenarios. However, representations have been received by the CBIC requesting that exporters who have received capital goods under the Export EPCG Scheme, should be allowed to avail the facility of claiming refund of the IGST paid on exports. GST Council amended the sub-rule along with sub-rule (4B) of rule 89 of the Gujarat Goods and Services Tax Rules, 2017 prospectively in order to enable exporters to avail the facility by issuing notification No. 54/2018 –State Tax dated October 09, 2018. Alongside the amendment carried out in the sub-rule through the notification No. 39/2018- State Tax dated September 04, 2018 has been rescinded vide notification No. 53/2018 – State Tax dated the October 09, 2018.

b.      For removal of doubts, it is clarified by the Government of Gujarat that the net effect of the changes would be that any exporter who himself/herself imported any inputs/capital goods in terms of notification Nos. 78/2017-Customs and 79/2017-Customs both dated October 13, 2017 shall be eligible to claim refund of the IGST paid on exports till the date of the issuance of the notification No. 54/2018 –State Tax dated October 09, 2018.

c.       However, exporters who are receiving capital goods under the EPCG scheme, either through import in terms of notification No. 79/2017-Customs dated October 13, 2017 or through domestic procurement in terms of notification No. 48/2017-StateTax, dated October 18, 2017, shall continue to be eligible to claim refund of IGST paid on exports and would not be hit by the restrictions provided in the said sub-rule. All clarifications issued in this regard vide any Circular issued earlier has been superseded.

[Circular No. 70/2018]                                                                   

URL: https://commercialtax.gujarat.gov.in/vatwebsite/download/cir_noti/CIR/Clarification%20on%20certain%20issues%20related%20to%20refund.pdf


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