SECTION 22 REFUND OF TAX-PART-I

GST Update 29.01.2016

GST DAILY DOSE OF UPDATION:-

SECTION 22 REFUND OF TAX-PART-I:-

The procedure to claim refund of tax is specified under section 22 of the GST Act, 2016. The sub-section (1) states that any person claiming refund of any tax and interest, if any, may make an application in that regard to the proper officer of IGST/CGST/SGST before the expiry of two years from the relevant date in such form and in such manner as may be prescribed. The proviso further states that the limitation of two years shall not apply where such tax or interest has been paid under protest. In this regard, it is pertinent to note that the Joint Committee Report on Business Processes on Refund prescribes the time limit of filing refund claim as one year from the relevant date and there is contradiction at this point between the proposed GST Law and the Joint Committee Report. It is also pertinent to note that there is doubt about the authenticity of the leaked GST Act, 2016. However, if the leaked GST Act, 2016 is the actual draft, the discrepancy should be rectified in the final draft.

The sub-section (2) states that the refund application shall be accompanied by such documentary evidence as may be prescribed to establish that refund is due to the applicant and such documentary or other evidence as may be furnished to establish that the incidence of tax for which refund is being filed has not been passed on to any other person. In this context, it is worth noting that the Joint Committee Report on Business Processes for Refund prescribes online filing of refund application so that the practice of filing huge documents with the refund claim is being dispensed with. However, the proposed law indicates that documents will be required to be filed which is also contrary to the Joint Committee Report.

The sub-section (3) specifies that on receipt of refund application, the proper officer will pass order for the refund claim filed by the applicant. The sub-section (4) prescribes time limit for issuing order in case of different refund claims as follows:-

·        60 days from date of receipt of application in case of refund arising from export of goods;

·        90 days from the date of receipt of application in case of refund arising from export of services;

·        45 days from the date of receipt of application in case of refund of unadjusted input tax credit under sub-section (7) of section 18;

·        60 days from the date of receipt of application in case of refund arising on account of judgment, decree, order or direction of the appellate authority or Tribunal or any Court;

·        90 days from the date of receipt of application for refund in any other case;

Furthermore, there is explanation stating that the application for the purpose of this sub-section shall mean complete application containing all information as may be prescribed. The explanation indicates that the above time limits would be counted from the date when refund application is complete, i.e., from the date of rectifying the defects being pointed out. Also, specifying different time limits for passing orders for refund claims filed in different circumstances is not understandable and will only complicate and prolong the refund mechanism.

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GST Update 29.01.2016

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