SELF DECLARATION FOR PASSING UNJUST ENRICHMENT

GST Update 21.09.2016

GST DAILY DOSE OF UPDATION:-

SELF DECLARATION FOR PASSING UNJUST ENRICHMENT:- The sub-section (3) of section 38 prescribes that refund application shall be accompanied by such documentary or other evidence to establish that the amount of tax for which refund is being claimed has been borne by him and the incidence of such tax has not been passed on to any other person. The proviso to section further states that where amount of refund claimed as refund is less than Rs. 5 Lakhs, it shall not be necessary for the claimant to furnish any documentary or other evidences and instead, he may file a declaration on the basis of documentary or other evidences with him, certifying that the incidence of such tax and interest had not been passed on by him to any other person.

In this context, it is pertinent to mention that sub-section (4) states that if the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable, he may order accordingly. It is submitted that although the proviso provides an option to the claimant that in case the refund amount is less than Rs. 5 Lakhs, refund may be sanctioned on the basis of self declaration that incidence of tax for which refund is being claimed has not been passed on to any other person. However, it is perceived that the intended benefit of the proviso would hardly be extended to assessees because there is no compulsion for officer to accept and consider such declaration of assessee. The sub-section (4) states that refund will be granted if the proper officer is satisfied that the whole or part of the amount claimed as refund is refundable and we all know that it is so very difficult to satisfy revenue officers. Presently, under Central Laws, in order to claim refund of SAD and to substantiate that unjust enrichment is not attracted, CBEC Circular No. 16/2008 dated 13.10.2008 clarifies that Certificates from Chartered Accountants are acceptable. However, often refund claims are rejected on ground of unjust enrichment even on furnishing Chartered Accountant Certificate. Reference may be made to decision given in the case of COMMISSIONER OF CUSTOMS, BANGALORE VERSUS APPLE INDIA PVT LTD [2014 (301) E.L.T. 675 (TRI.-BANG)] which is affirmed by Karnataka High Court and reported as [2014 (309) E.L.T. 29 (KAR)]. When the revenue officers do not consider certificates given by Chartered Accountants for clearing the test of unjust enrichment, it is difficult to perceive that they will accept self declaration by claimant.

In our opinion, the proviso would hardly benefit assessees in absence of any mandatory direction to accept the self declaration by the revenue authorities in the statutory provisions. Hence, it is feared that the assessees will have to struggle for sanction of refund claims in GST regime also.

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GST Update 21.09.2016

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