SECTION 22 REFUND OF TAX-PART-II

GST Update 30.01.2016

GST DAILY DOSE OF UPDATION:-

SECTION 22 REFUND OF TAX-PART-II:-

The sub-section (5) of section 22 states that the refundable amount shall instead of being credited to the Consumer Welfare Fund, be paid to the applicant if such amount is relatable to refund of tax on exports, refund of unadjusted input tax credit, if the incidence of tax and interest has not been passed on to any other person. This has the effect that the principle of unjust enrichment does not apply to refund claims pertaining to exports and accumulated cenvat credit.

Furthermore, Explanation B to this section clarifies the meaning of relevant date as-

(a)              In the case of goods and/or services exported out of India where a refund of tax paid is available in respect of the goods and/or services themselves or, as the case may be, the inputs used in such goods and/or services, the date on which the return relating to such export of goods/services is filed. It is pertinent to note that this clause specifies refund claim for rebate of tax paid on inputs used in export or rebate of tax paid on clearance of finished goods for export. Presently, as per section 11B of the Central Excise Act, 1944, the relevant date for refund claim is the date of let export order. Moreover, even in the Joint Committee Report of Business Processes on Refund, in case of refund of GST paid on exported goods, relevant date is being specified as the date of ‘Let Export Order’ while in case of refund of GST paid on export of services, the same is stated as the date of BRC. Therefore, the draft GST Act, 2016 indicates deviation in the meaning of relevant date for refund of tax on exports.

(b)               In the case of goods returned for being remade, refined, reconditioned, or subjected to any similar process in any place of business, the date of entry into the place of business for the said purpose;

(c)              In case where tax is provisionally assessed under this Act or the Rules made thereunder, the date of adjustment of the tax after the final assessment thereof;

(d)             In case where tax becomes refundable as a consequence of judgment, decree, order or direction of Appellate Authority, Appellate Tribunal or any Court, the date of communication of such judgment, decree, order or direction;

(e)              In case of refund of unadjusted input tax credit, the end of financial year in which such claim of refund arises. It is worth noting that in the Joint Committee Report on Business Process for Refund, the relevant date for refund of accumulated input credit of GST when goods are exported is let export order whereas in case of export of services, it is the date of BRC. It appears that there is difference in refund of accumulated cenvat credit for exports and unadjusted input tax credit which is available to all assessees due to inverted duty structure wherein tax on output is less than tax on input.

(f)               In any other case, the date of payment of tax;

The major change perceived is in the relevant date for the purpose of refund of taxes paid on export of goods/services. The other provisions are more or less similar to that presently in force.

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GST Update 30.01.2016

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