1. Who can apply for the claim?
Sub-section (1) of Section 54 of the CGST Act states that “any person” who has paid any tax and interest, if any, paid on such tax or any other amount can apply for the claim of such tax, interest (if any) or other amounts so paid. The term “ANY PERSON” opens the refund arena to that person who has borne the incidence of tax. This means that when the tax or interest is wrongly paid and the incidence of such tax is not passed to the receiver then the supplier is eligible for the refund or otherwise the receiver who paid the said taxes is eligible for the claim.
2. Type of claim permitted under Section 54
Section 54 of the CGST Act is appended with the explanation of the term “refund”, which includes 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, or refund of tax on the supply of goods regarded as deemed exports, or refund of the unutilized input tax credit (“ITC”) as provided under Sub-section (3) of Section 54.
This section deals with the legal and procedural aspects of claiming refund by any person in respect of:
- any tax and interest paid on such tax (which was excess paid, provided he had not passed on the incidence of such tax and interest to any other person);
- Where a refund voucher has been issued
- Excess amount paid during registration as advance by the casual tax person/Non-resident taxable person
- excess balance in the electronic cash ledger;
- any other amount paid;
- For a supply which is not provided and for which invoice has not been issued.
- On intra-State supply which is subsequently held to be inter-State supply and Vice versa.
- On account of the assessment/provisional assessment/appeal/any other order
- tax paid on zero-rated supplies of goods or services or both;
- Unutilized input tax in the case of
- Zero-rated supplies under the cover of Letter of Undertaking.
- Supply of goods under the inverted tax structure.
- tax paid on the supply of goods regarded as deemed exports;
Sub-section (8) of Section 54 categorically provides that the refund will be credited to the applicants’ account only when the claim is for the purposes referred to in this Sub-section.
3. The time limit for the claim
In the erstwhile regime, the time limit for filing the claim application was ONE YEAR. In the GST regime, any person claiming any of the above-referred refunds is required to make an application to the proper officer before the expiry of TWO YEARS from the relevant date in prescribed form and manner. However, the time limit of TWO YEARS does not apply to the claim application filed for the reason of excess balance in the electronic cash ledger.
For all other type of refunds, the time limit of TWO YEARS is counted from the relevant date, which is explained in the table given below:
|S. No||Purpose of Refund||The relevant date is the date on which-|
|1||Goods are exported out of India via sea or air||Ship or Aircraft in which goods are loaded leaves India.|
|2||Goods are exported out of India via the land route||Goods pass the custom frontier.|
|3||Goods are exported out of India via post||Goods are dispatched by post office.|
|4||Deemed Export||The return relating to deemed export is furnished.|
|5||Export of Services – when the supply of service is completed before receipt of payment||Payment is received in convertible foreign exchange, or Indian rupees wherever permitted by the RBI.|
|6||Export of Services – when payment is received in advance before the issue of invoice||The invoice is issued|
|7||Refund as a consequence of Judgement/ Decree/ Order/ Direction of the Appellate Authority/ Appellate Tribunal / any Court||The communication of Order, Judgement/ decree, etc. issued.|
|8||Inverted Rate Duty||Due date of the return for the tax period under section 39.|
|9||Provisional payment of tax||The tax is adjusted after the final assessment.|
|10||A person other than the supplier||Goods or Services are received by such person|
|11||Any other case||The tax is paid.|
4. Period for Refund Claim
The Central Board of Indirect Taxes and Customs (“CBIC”) vide Circular No. 125/44/2019- GST, dated 18.11.2019 (“Master Circular-Refund” or “Circular 125/44/2019”), clarifies that the applicant, at his option, may file a refund claim for a tax period or by clubbing successive tax periods. The period for which refund claim has been filed, however, cannot spread across different financial years. There is a practical difficulty in those cases where the ITC is taken in months where there are no exports and the exports happen in the subsequent year. In such cases, the claimant applied for a lesser refund as compared to refund admissible. There was a restriction of clubbing of financial year while claiming the refund. CBIC vide Circular No. 135/05/2020-GST dated 31.03.2020 (“CIR 135/05/2020”) has removed the said restriction and now clubbing of tax periods across financial years has been allowed.
5. Minimum Refund Limit
Section 54(14) of the CGST Act provides that no refund under section 54(5) or 54(6) thereof shall be paid to an applicant if the amount is less than one thousand rupees. In this regard, it is clarified that the limit of rupees one thousand shall be applied for each tax head separately and not cumulatively.