OBJECTIVE Goods and Services Tax (GST) is an Indirect Tax levied in India introduced in July, 2017 which was one of the most important reforms in the Indian Economy. Timely refund mechanism is essential in tax administration, as it facilitates trade through the release of blocked funds for working capital, expansion and modernisation of existing business. In this webinar, we shall understand and analyse the provisions related to Refund under the GST law.

1. Refunds under GST
CA Divakar Vijayasarathy

2. Credits and Acknowledgement
Harish Kumar R
CA Jugal Narendra Gala

3. Legends Used in the Presentation
CTP Casual Taxable Person
EOU Export Oriented Undertakings
GST Goods and Service Tax
IGST Integrated Goods and Service Tax
ITC Input Tax Credit
LUT Letter of Undertaking
NRTP Non-resident Taxable Person
RBI Reserve Bank of India
SEZ Special Economic Zone
UN United Nations

4. Presentation Schema
Introduction Refund of Tax
Application for
Refund Claim
Time Limit for
Refund
Documentary
Evidences
Grant of Provisional
Refund
Order of Refund
Issuance of Show
Cause Notice and
Refund Rejection
Withholding of
Refund Claim
Refund in case of
Export
Refund to Specified
Persons
Interest on Delayed
Refunds

5. Introduction
The concept of refund under GST relates to any amount returned by the Government that was
paid by the registered taxpayer either in excess or was not liable to be taxed
Under GST the process of claiming a refund is standardized to avoid confusion
The claim and sanctioning procedure is primarily online and time bound, which is a marked
departure from the earlier time consuming and cumbersome procedure

6. Refund of Tax – Sec 54
Situations leading to refund claims
A claim for refund may arise in the following situations
Export/supply to SEZ developer/unit on payment of IGST
Refund of unutilized ITC - In case of export/supply to SEZ developer/unit without payment of IGST or
inverted duty structure, refund of unutilized ITC is available
Refund of tax paid on the supply of goods regarded as deemed exports may be claimed
Refund of any balance in the electronic cash ledger after payment of tax, interest, penalty, fee
Refund on account of tax paid on a supply which is not provided and for which invoice has not been
issued
Refund of tax wrongly collected and paid
Inverted duty structure is a situation where import duty on finished goods is low compared to the import duty on
raw materials that are used in the production of such finished goods
E.g.: The import duty on tyres is 10% and the tariff on the imports of natural rubber which is used in the production
of tyres is 20%
Inverted Duty Structure

7. Contd.
Refund of the IGST paid by tourist leaving India on any supply of goods taken out of India
Tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate
Authority, Appellate Tribunal or any Court
On finalization of provisional assessment, if any tax becomes refundable to taxpayer
Refund of taxes on purchases made by UN bodies or embassies
Tourist
A person not normally resident in India, who enters India for a stay of
not more than 6 months for legitimate non-immigrant purposes
Provisional Assessment
Provisional assessment can be conducted for a taxable person when
the taxpayer is unable to determine the value of goods or service or
both or determine the rate of tax applicable thereto

8. Application for Refund Claim
Any person claiming refund may file an application in Form GST RFD - 01 electronically in GST portal
However, in case of refund of IGST paid on goods exported, the shipping bill filed by the exporter is itself
treated as a refund claim, subject to specified conditions (explained later)
A registered person claiming refund of any balance in the electronic cash ledger may claim such refund
through return for the relevant period in GSTR-4 (composition dealer) / GSTR-7 (return of TDS)

9. Filing of Refund Claim in Specified Circumstances
Deemed exports
• In respect of supplies regarded as deemed exports, either recipient or supplier are allowed to file the
refund application
• However, the supplier can seek refund only in case where the recipient does not avail ITC on such
supplies
Supplies to a SEZ unit or a SEZ developer
The application for refund shall be filed by the
(a) Supplier of goods after such goods have been admitted in the SEZ
(b) Supplier of services along with such evidence regarding receipt of services by SEZ
Supplies by Casual taxable person (CTP) /Non-resident taxable person (NRTP)
The tax deposited by a CTP or a NRTP shall be refunded, if
The entire period for which the certificate of registration granted had remained in force Furnished all the returns
The tax deposited at the time of registration shall be claimed in the last return itself

10. Time Limit for Claiming Refund
Refund application can be made before the expiry of 2 years from the Relevant Date
Relevant Date
1. Export of goods - where a refund of tax paid is available in respect of goods or in the inputs/input
services used in such goods and
goods are exported by sea or air date on which the ship or the aircraft leaves India
goods are exported by land date on which such goods pass the frontier
goods are exported by post
date of dispatch of goods by the concerned
Post Office
2. Export of services - where a refund of tax paid is available in respect of services or in the inputs or input
services used in such services, and
the supply of services had been completed
prior to the receipt of such payment
Date of receipt of consideration
payment for the services had been received in
advance prior to the date of issue of the invoice
Date of issue of invoice
3. In case of supply of goods regarded as deemed
exports
Date on which the return relating to such
deemed exports is furnished

11. Contd.
4. Where tax becomes refundable as a
consequence of judgment, decree, order or
direction
Date of communication of such judgment, decree,
order or direction
8. Any other case
Due date for furnishing of return
Date of payment of tax
5. In case of refund of unutilised ITC in case of zero
rated supplies without payment of tax or on
account of inverted duty structure
6. In the case where tax is paid provisionally
Date of adjustment of tax after the final assessment
thereof
7. In the case of a person, other than the supplier
Date of receipt of goods or services or both by such
person

12. Documentary Evidences for Filing Refund Claim
The application shall be accompanied by
such documentary evidence as may be prescribed to establish that a refund is due to the applicant and
there is no unjust enrichment
• However, where the claim of refund is less than Rs. 2 lakh, it is not necessary to furnish any documentary
and other evidences but he may file a self-declaration, certifying that there is no unjust enrichment
• Where the refund claimed exceeds Rs. 2 lakh, a Certificate from a Chartered Accountant or a Cost
Accountant is required to confirm that there is no unjust enrichment
Along with the form GST RFD-01, in Annexure 1 the following documentary evidences shall be furnished as applicable:
A judgment, decree, order/direction of Appellate
Authority, Appellate Tribunal/any Court
Copy of the order passed
Export of services
statement containing the number and date of invoices and the relevant
Bank Realization Certificates or Foreign Inward Remittance Certificates
Export of goods
a statement containing the number and date of shipping bills or bills of
export and the number and date of relevant export invoices
Supply of goods is made to a SEZ unit
or a SEZ developer
statement containing the number and date of invoices
a declaration to the effect that tax has not been collected from the
SEZ unit/ SEZ developer

13. Contd.
Deemed exports Statement containing the number and date of invoices along with an:
acknowledgment by the jurisdictional Tax officer of the Advance Authorisation holder
or Export Promotion Capital Goods Authorisation holder
undertaking by the recipient of deemed export supplies that no ITC on such supplies
has been availed
undertaking by the recipient of deemed export supplies that it shall not claim the
refund in respect of such supplies and the supplier may claim the refund
Refund of any unutilised ITC accumulated
on account of inverted duty structure
a statement containing the number and the date of the
invoices received and issued during a tax period
Finalisation of provisional assessment
reference number of the final assessment order and a
copy of the said order
Tax wrongly collected and paid to the
Government
Statement showing the details of transactions considered as intra-
State supply but which is subsequently held to be inter-State supply
excess payment of tax
Statement showing the details of the amount of claim on
account of excess payment of tax

14. Grant of Provisional Refund
GST law provides for grant of provisional refund of 90% of the total refund claim, in case the claim relates for
refund arising on account of zero rated supplies
The provisional refund would be paid within 7 days after giving the acknowledgement through form GST RFD 04
The remaining 10% can be refunded later after due verification of documents furnished by the applicant
The provisional refund would not be granted to such supplier who, during any period of 5 years immediately
preceding the refund period, was prosecuted for any offence where the amount of tax (GST or erstwhile indirect
tax regime) evaded exceeds Rs. 2.5 crores

15. Provisional Refund Being Higher than the Final
Refund
Where the Proper Officer after detailed examination founds that the provisional refund amount is higher than the
final refund amount, he shall issue a show cause notice as to why:
• The claimed amount should not be rejected
• The amount erroneously refunded should not be recovered
The Proper Officer shall issue show cause notice as to why the amount claimed of Rs. 30/- should not be rejected as
per the relevant provisions of the law and the amount of Rs. 20/- erroneously refunded should not be recovered
On detailed examination, it appears to the Proper Officer that only an amount of Rs. 70 is admissible as refund to the
applicant
The Proper Officer sanctions Rs. 90 as provisional refund
Consider a situation where an applicant files a refund claim of Rs.100/- on account of zero-rated supplies
Illustration

16. Order of Refund
On receipt of application for refund, the Proper Officer is satisfied that the whole/part of the amount
claimed as refund is refundable, he may make an order accordingly and the amount so determined shall
be credited to the Consumer Welfare Fund *
However, in certain specified circumstances, the refundable amount is to be paid to the applicant
instead of being credited to the Consumer Welfare Fund
* Consumer Welfare Fund is created to promote and protect the welfare of consumer, create consumer
awareness and strengthen consumer movement in the country, particularly in rural areas

17. Contd.
Where the Proper Officer is satisfied that the amount refundable is payable to the applicant instead of
being credited to Consumer Welfare Fund, he shall make an order in Form GST RFD-06 issue a payment
advice for the amount of refund
Amount of refund shall be electronically credited to any of the bank accounts of the applicant
Time-limit for issuance of refund order
Refund order shall be issued by the Proper Officer within 60 days from the
date of receipt of application

18. Principal of Unjust Enrichment
• Unjust enrichment means retention of a benefit by a person that is unjust or inequitable
• Unjust enrichment occurs when a person retains money or benefits which in justice, equity
and good conscience, belong to someone else
If the claim of refund passes the test of unjust enrichment, it is paid to the applicant
Cases where theory of unjust enrichment is inapplicable
The refundable amount shall, be paid to the applicant (specified circumstances), if such amount is relatable to
refund of tax paid on of goods or services or both or on inputs or input services used in exports
refund of unutilized ITC in case of zero rated supplies made without payment of tax or
accumulated ITC on account of inverted duty structure
refund of tax paid on a supply which is not provided and for which invoice has not been issued
refund of tax where tax paid on a transaction treated to be an intra-State supply, but which is
subsequently held to be an inter-State supply or vice-versa
the applicant has not passed on the incidence of tax and interest, paid by him, to any other
person
the tax or interest borne by such other class of applicants as may be notified or recommended

19. Issuance of Show Cause Notice and Rejection of
Refund Claim
Where the Proper Officer is satisfied that the whole or any part of the amount claimed as refund is not
admissible, he shall issue a notice to the applicant in Form GST RFD-08
Applicant will be required to furnish a reply within 15 days of the receipt of such notice in Form GST
RFD-09
The Proper Officer shall after giving him an opportunity of being heard, pass an order, sanctioning the
amount of refund in whole or part, or rejecting the said refund claim

20. Withholding of Refund Claim
- Any refund of unutilized ITC is due in case of zero rated supplies made without payment of
tax or on account of inverted duty structure
- to a registered person who has defaulted in furnishing any return or who is required to pay
any tax, interest or penalty
- which has not been stayed by any Court, Tribunal or Appellate Authority by the specified
date, the Proper Officer may
Where an order giving rise to a refund is the subject matter of an appeal or further
proceedings or where any other proceedings under this Act is pending and
the Commissioner is of the opinion that grant of such refund would adversely affect
the revenue in the said appeal or
other proceeding on account of wrong doing or fraud committed
a.
b.

21. Refund in case of Export of Goods or Services
Exporter has the option either to
export under bond/LUT without payment
of IGST and claim refund of ITC
pay IGST at the time of export and claim
refund thereofOr
Refund on account of export of goods or services [with payment of tax]
Application
The shipping bill/ bill of export filed by the exporter of goods/services shall be deemed to be an
application, if
the person in charge of the conveyance carrying the export goods duly files a
departure manifest; or an export manifest or an export report covering the number
and the date of shipping bills/bills of export
the applicant has furnished a valid return in Form GSTR-3/ Form GSTR-3B

22. Contd.
Processing of
Refund claim
An amount equal to the IGST paid in respect of each shipping bill/ bill of export shall be electronically
credited to the bank account of the applicant
Applicant should not receive supplies on which the benefit of deemed exports has been availed
or benefit of supply of goods to merchant exporters at the concessional rate of 0.1% has been
availed, or
Avail the benefit of exemption from IGST and Compensation Cess, for goods imported by EOU or
for goods imported under Advance Authorisation
Specified Conditions
Withholding of refund of IGST
The claim for refund shall be withheld where
a request has been received from the jurisdictional Commissioner of Central Tax,
State Tax or Union Territory Tax to withhold the payment of refund or
the Proper Officer of Customs determines that the goods were exported in
violation of the provisions of the Customs Act, 1962

23. Refund to Specified Persons – Sec 55
Government may, on the recommendations of the Council, notify
any specialised agency of the United Nations Organisation; or
any Multilateral Financial Institution and Organisation notified under the United Nations
(Privileges and Immunities) Act, 1947; or
Consulate or Embassy of foreign countries; and
any other person or class of persons as may be specified in this behalf
The following persons have been notified by the Government
United Nations
Foreign diplomatic mission or consular post in India, or diplomatic agents or career
consular officers
Canteen Stores Department ( under Ministry of Defence)
which shall be entitled to claim refund of taxes paid on the notified inward supplies of goods or services or both
received by them

24. Specified Conditions
Application Application shall be made in Form GST RFD 10 on GST Portal along with a Statement of the
Inward Supplies in Form GSTR-11
Time limit
Persons eligible to claim refund shall make an application once in every quarter but before
the expiry of 18 months from the last day of the quarter in which such supply was received
Conditions Refund of tax paid by the applicant shall be available if all the following conditions are satisfied
the inward supplies of goods or services or both were received
from a registered person against a tax invoice
name and GSTIN/UIN of the applicant is mentioned in the tax
invoice
such other restrictions or conditions as may be specified in the
notification are satisfied

25. Interest on Delayed Refunds – Sec 56
Interest on amount refundable consequent to order passed by Proper Officer
Where any tax ordered to be refunded to any applicant is not refunded within 60 days from the
date of receipt of application, interest shall be payable to the applicant @ 6% p.a
Interest on amount refundable consequent to order passed in an appeal or further proceedings
Where any claim of refund arises from an order passed by an Adjudicating Authority or Appellate Authority or
Appellate Tribunal or Court which has attained finality and the same is not refunded within 60 days from the date
of receipt of application filed consequent to such order, interest shall be payable on such refund @ 9% p.a
Order sanctioning interest on delayed refunds
Where any interest is due and payable to the applicant, the Proper Officer shall make an order
along with a payment advice in Form GST RFD 05
Such order shall specify
the amount of refund which is delayed
the period of delay for which interest is payable and
the amount of interest payable

26. Statistics

27. Status of Refund (as on 01.09.2019) [Rs. In crores]
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
55,000
60,000
Application filed on the Portal Amount Sanctioned Amount Rejected
State Centre
Rs. In crores
Tax Authority Total Amount Amount Sanctioned Amount Rejected
State 60,466 35,290 2,043
Centre 55,024 46,848 1,975

28. Refund Applications vs Provisional/ final order passed
(as on 01.09.2019)
361,320
194,872
224,051
129,694
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Application filed on the Portal Applications for which provisional/ final order passed
State Centre

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