ISSUES ARISING WHILE SANCTIONING OF REFUND OF EXPORTS WITH PAYMENT OF DUTY

Almost more than 9 months have been passed since the GST has been implemented. But still the registered exporters are facing lot of issues every other day due to lack of proper co-ordination between GST portal and Customs EDI system in getting refunds. In this update, we will be listing out the common problems faced by the exporters due to wrong filing of returns resulting into non-sanctioning of refunds under exports with payment of duty.

For refund of exports with payment of duty, there are some conditions laid down for successful claiming of such refund which are:

1.     GSTR-3B for the month is filed;
2.     Table 6A of GSTR-1 has been filed;
3.     Details of Shipping Bill and Invoice provided in Table 6A of GSTR-1 should match; and
4.     The IGST amount mentioned in GSTR-3B under zero rated supply should tally to the IGST mentioned in Table 6A of GSTR-1.

However, certain mistakes or mismatch in the amount leads to non-sanctioning of such refunds thereby laying further hardships on exporters. Although exporters have been given an option to rectify any error committed while filing in GSTR 1 through Table 9A of GSTR 1 same facility is not been provided for return GSTR-3B. Moreover, there are large number of cases wherein data has still not been transmitted by GSTN to Customs EDI system due to failure on account of other validations at their end.

There has been a circulation of circular no. 450/36/2018-Cus IV dated 28.03.2018 on TAXGURU site which states that one of the validation check done by GSTN is to ensure that the refund claimed is not more than the IGST paid by the exporter. However, such validation error is due to the following reasons:

I.                   Issues pertaining to declaration of Cess amount –

Validation Error:Table 6A of GSTR 1 requires feeding of export details with regard to IGST mainly the rate, taxable value and amount on account of exports. However, for earlier periods of GST regime, there was no column for declaration of cess amount due to which the exporters filed the accumulated (IGST + cess) amount in the tax head. This resulted in mismatch of amount with GSTR-3B ensuing non transfer of such export details by GSTN to Customs EDI system leading to delay in refunds.

Solution:For non transmission of data validation error GSTN and Principal CCA are resorting to system based solution.

II.                 Export Supplies has been declared as domestic supplies in GSTR 3B-

Validation error: The most common mistake done by exporters is declaration of export supplies in domestic supplies, which means, in GSTR-3B export details are declared in outward supplies (i.e. in Table 3.1 (a)) instead of zero-rated supply instead of (Table 3.1 (b)).

Solution:In cases where it can be established that the mistake is only on account of feeding details as above which cannot be resolved by computing using system/logic, the GST field officers will scrutinize the returns as following and seek necessary clarification from the exporters wherever necessary:

1.     The officers would compare the aggregate data of inter- state supplies as declared in Table 4, 5, 6A and 7B along with amendments, if any declared in Table 9, 10 and 11 of FORM GSTR-1, with the aggregate data of inter-state supplies declared in Table 3.1(a), 3.1(b) and 3.1(d) of FORM GSTR-3B. Thereafter, if the aggregate values get matched, then the officer would calculate the notional value of Table 3.1(b) on the basis of reconciliation which should be greater than IGST amount declared in Table 6A of GSTR-1.

2.     While reconciling the data, the officer shall also take into account the amount of IGST paid as shown under Table 6.1 of GSTR 3B.

3.     In no case, the notional values of IGST in Table 3.1 shall exceed the value of IGST paid in Table 6.1 of GSTR 3B with the purpose to ascertain whether details pertaining to export supplies are actually filed under domestic supplies or not.

4.     The department may ask from the exporters about the errors made while filing Table 3.1(b) of GSTR 3B in written to ensure that revised values submitted by exporters in Table 6A of GSTR 1 shall be less than or equal to that in 3.1(b) of GSTR 3B.

III.              Any issue other than above

In all other cases, where the errors are committed by exporter a letter from exporter explaining the error and the correction to be made in GST return shall be taken wherein exporter may also provide a certificate from CA that the IGST has been paid on export or goods for which IGST refund is being claimed.

Although this solution seems to be feasible to get refund of exports with payment of duty with the help of manual intervention wherein all the aggregate amounts are to be verified by the officer of Customs, it is yet to be issued officially on website of CBIC i.e. www.cbec.gov.in.

The content of this GST update is for educational purpose only and not intended for solicitation.

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ISSUES ARISING WHILE SANCTIONING OF REFUND OF EXPORTS WITH PAYMENT OF DUTY

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