GST update No 228 on amendment in Rule 96

It is well known fact that getting refunds sanctioned from the departmental authorities is a herculean task. Moreover, with the steep rise in the cases of fraudulent exports, stringent provisions are being formulated for withheld of refund claims where the exporters are flagged under the category of risky exporters. The recent 47th GST Council Meeting has proposed amendment in Rule 96 of the CGST Rules, 2017 in order to process the refund applications that require verification by the jurisdictional officers where the exporter has been identified as risky exporter. The present update seeks to analyse the changes made in Rule 96 of the CGST Rules, 2017 and its implications on the exporters. The notification no. 14/2022-Central Tax dated 05.07.2022 amending CGST Rules, 2017 has made the following amendments in Rule 96 of the CGST Rules, 2017 which have retrospective effect w.e.f. 01.07.2017 :- Rule 96(1)(b):- Provided that if there is any mismatch between the data furnished by the exporter of goods in Shipping Bill and those furnished in statement of outward supplies in FORM GSTR-1, such application for refund of integrated tax paid on the goods exported out of India shall be deemed to have been filed on such date when such mismatch in respect of the said shipping bill is rectified by the exporter Rule 96(5A):- (5A) Where refund is withheld in accordance with the provisions of clause (a) or clause (c) of sub-rule (4), such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01and the intimation of such transmission shall also be sent to the exporter electronically through the common portal, and notwithstanding anything to the contrary contained in any other rule, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission Rule 96(5B):- (5B) Where refund is withheld in accordance with the provisions of clause (b) of sub-rule (4) and the proper officer of the Customs passes an order that the goods have been exported in violation of the provisions of the Customs Act, 1962 (52 of 1962), then, such claim shall be transmitted to the proper officer of Central tax, State tax or Union territory tax, as the case may be, electronically through the common portal in a system generated FORM GST RFD-01and the intimation of such transmission shall also be sent to the exporter electronically through the common portal, and notwithstanding anything to the contrary contained in any other rule, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission. The amendment in Rule 96 (1)(b) has the effect that in case the refund claim of IGST paid on exports which is being granted automatically is being withheld due to mismatch in the shipping bill and GSTR-1, the date of filing of refund application shall be deemed to be the date when such mismatch is being rectified by the exporter. It is submitted that the sole intention of shifting the date of filing of refund application by way of deeming fiction is to save interest payment by the department on delay in sanction of refund claim. This provision is adverse to the exporters as the mismatches are very common and often occur due to technical glitches on the portal but this change will lead to putting the exporter at the disadvantageous position as the date of filing of refund application has been deferred to the date of correction of such mismatch by the exporter. This amendment is unjust as it seeks to prescribe the date of filing of refund application which is dependent on the event which is beyond the control of the exporter. Similarly, the provision contained in Rule 96(5A) and Rule 96(5B) seeks to prescribe that in case the refund claim is being withheld either due to verification of credentials of the exporter or due to fact that goods were exported in violation of Customs Act, the application of refund shall be transmitted to the jurisdictional officer electronicallythrough the common portal in a system generated FORM GST RFD-01 and the intimation of such transmission shall also be sent to the exporter electronically through the common portal. Moreover, the said system generated form shall be deemed to be the application for refund in such cases and shall be deemed to have been filed on the date of such transmission. It is submitted that the above provision again seeks to shift the date of filing of refund application to the date of system generated RFD-01 which is beyond the control of the exporter. It is submitted that this provision is also introduced with a view to save interest payment by the department on delayed sanction of refund to the exporters. Moreover, one point that needs to be highlighted is that practically, the time taken in processing of refund claims by the jurisdictional authorities is more as compared to system generated refund claims. Hence, if in case where the flag of ‘risky exporter’ is being removed after transmission of the refund claim to the jurisdictional officer, there will be unwarranted delay in sanction of refund. It is suggested that in such scenario, the refund claim should be transferred back to the customs portal for automatic sanction in the bank account of the exporter so that the refund claim is speedily disbursed to the exporter. Another point of concern that can be for the exporter is the delay in transmission of refund claim to the jurisdictional officer for further processing as the transmission is also dependant on system and a lot of technical glitches have been experienced by the assessees in past. It is suggested that a timeframe should be specified for transmission of such cases, for example- the data needs to be transmitted within a period of 15 days to the jurisdictional officer from the date of filing of shipping bill by the exporter so that the exporter does not suffer on account of time taken in the transmission of data to their jurisdiction. In our opinion, although the minutes of the GST Council Meeting mentioned that the amendment in Rule 96 of CGST Rules, 2017 has been recommended to provide transmission of GST refund claims to the jurisdictional authorities for expeditious disposal of the refund claims but in reality, it would add to the miseries of the exporter as the date of filing of refund application will be based on an event which is beyond their control thereby denying the exporters with their right of claiming interest on delayed sanction of refund claim to them.

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GST update No 228 on amendment in Rule 96

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