INTRODUCTION TO GST REFUNDS

1.1 INTRODUCTION
The word refund, in simple terms, means an amount of money that is given back to a person upon
happening or occurring of some event. In taxation parlance, refund refers to any amount that is due to
the taxpayer from the tax administration due to excess payment of taxes or any other reason. In order to
establish an effective and efficient tax administration system in GST regime, the entire refund process
has been clearly defined in the law.
There are altogether four broad legislations under GST regime namely:
Central Goods and Services Tax Act, 2017,
State Goods and Services Tax Act, 2017 of each States,
Union Territory Goods and Services Tax Act, 2017, and
Integrated Goods and Services Tax Act, 2017

Note: The CGST and SGST Acts are just and merely the replica of each other and hence, the author
has used the terminology such as 'GST Act, 2017 and GST Rules, 2017' instead of CGST/SGST Act
at most of the places in the entire book to avoid repetitive reference to all the Acts. Though the
provisions in IGST differs from the CGST/SGST Law, therefore, at appropriate places the
terminology has been used as IGST Law only.

1.2 -REFUND PROVISION IN GST LAW

1.2 REFUND PROVISION IN GST LAW
The provisions related to refund is incorporated under Chapter XI of the GST Act, 2017 ranging
from sections 54 to 58. Chapter X of the GST Rules, 2017 incorporates provisions ranging from
Rules 89 to 97A. Further, as a part of the GST Rules, 2017, there are Refund Forms ranging from
GST RFD-01 to GST RFD-11.
Section Description Rule Description Form Description
Section Refund of tax Rule - 89 Application for GST-RFD-01 Application for refund
54 refund of tax,
interest, penalty,
fees or any other
amount
Rule - Manual filing and GST-RFD-01A Application for refund
97A processing (manual)
GST-RFD-01 Refund order details
B
Rule - 96 Refund of GST-RFD-01 Application for refund
integrated tax paid
GST-RFD-06 Refund
on goods or
sanction/rejection order
services exported
out of India GST-RFD-07 Order for complete
adjustment of
sanctioned refund
Rule - Refund of GST RFD-11 Furnishing of bond or
96A integrated tax paid letter of undertaking for
 on export of goods export of goods or
or services under services
bond or letter of
undertaking
Rule - 90 Acknowledgement GST-RFD-02 Acknowledgement
GST-RFD-03 Deficiency memo
Rule - 91 Grant of GST-RFD-04 Provisional refund order
provisional refund
GST-RFD-05 Payment advice
Rule - 92 Order sanctioning GST-RFD-05 Payment advice
refund
GST-RFD-06 Refund
sanction/rejection order
GST-RFD-07 Order for complete
adjustment of
sanctioned refund
GST-RFD-08 Notice for rejection of
application for refund
GST-RFD-09 Reply to show cause
notice
Rule - 93 Credit of the GST-PMT-03 Order for re-credit of the
amount of rejected amount to cash or credit
refund claim ledger on rejection of
refund claim
Rule - 94 Order sanctioning GST-RFD-05 Payment advice
interest on delayed
refunds
Section Refund in certain Rule - 95 Refund of tax to GST-RFD-10 Application for refund
55 cases certain persons by any specialized
agency of UN or any
multilateral financial
institution and
organization, consulate
or embassy of foreign
countries, etc.
GST-RFD-02 Acknowledgement
GST-RFD-06 Refund
sanction/rejection order
GST-RFD-07 Order for complete
adjustment of
sanctioned refund
GST-RFD-08 Notice for rejection of
application for refund
 GST-RFD-09 Reply to show cause
notice
Section Interest on delayed NA NA
56 refunds
Section Consumer Welfare Rule - 97 Consumer welfare NA
57 Fund fund
Section Utilization of Fund NA
58

1.3 -SCOPE OF REFUND IN GST LAW

1.3 SCOPE OF REFUND IN GST LAW
Explanation to section 54 defines the term "refund" which includes
(i) Refund of tax (output tax) paid on zero-rated supplies of goods and/or services, or
(ii) Refund of tax (input tax) on inputs or input services used in making zero-rated supplies, or
(iii) Refund of tax on the supply of goods regarded as deemed exports, or
(iv) Refund of unutilized input tax credit as provided under section 54(3) i.e. due to inverted duty
structure.
The aforesaid explanation prescribes the situations in which the refund can be granted as the
term used in the aforesaid explanation is that refund 'includes'. It clearly means that there can
be various other situations wherein refund can be granted to the person and/or the registered
persons as per the provisions of refund. However, before dealing with all the aforesaid specific
situations in which refund can be granted, let us obtain an understanding about the general or
basic provisions of refund in GST.

1.4 -REFUND OF TAX, INTEREST, PENALTY, FEE OR ANY OTHER AMOUNT PAID
1.4 REFUND OF TAX, INTEREST, PENALTY, FEE OR ANY OTHER AMOUNT PAID
Section 54(1) of the GST Act, 2017 states that once the tax or any other amount like interest,
penalty, fee, etc. is paid by the person and is eligible to claim refund then the taxpayer has to
keep the following points into consideration:
♦ The amount that can be claimed as refund in not merely tax but also interest, penalty, fee or any
other amount paid by him
♦ The amount which is being claimed as refund must have been paid
♦ The amount can be claimed by any person except the persons covered under notifications
issued under section 55. [Section 55 deals with the refunds to person holding UIN or specified
persons. It has been dealt separately.]
♦ The person has to make an application. In GST, there are broadly 2 GST Refund application
forms namely GST RFD-01 and GST RFD-10. In the instant case of section 54(1) which deals
with most types of refunds has to be applied in FORM GST RFD-01. For persons having UIN,
refund needs to be claimed by filing FORM GST RFD-10.However, for refund of IGST paid on
goods exported out of India, a separate procedure (i.e. no separate Refund Form has been
designed i.e. Shipping Bill itself shall be deemed to be the Refund Form) has to be followed
which has been dealt separately.
♦ The application shall be applicable for (i) registered taxable persons (ii) unregistered person
(iii) casual taxable person (iv) non-resident taxable person (v) tax deductor and (vi) tax
collector.
 ♦ The time limit for making an application for refund is before the expiry of 2 years from the
relevant date.
♦ The relevant date depends upon the situation of the applicant. Since there can be various
situations of refund, hence, the relevant date shall be stated where those refund provisions are
explained in the coming paragraphs.
♦ The application GST RFD-01 can be filed through the common portal i.e. www.gst.gov.in
♦ The application can be filed directly or through a Facilitation Centre notified by the
Commissioner.
1.5 -EXHAUSTIVE LIST OF REFUNDS IN GST
1.5 EXHAUSTIVE LIST OF REFUNDS IN GST
In order to keep the refund triggering issues at the minimum, The Joint Committee in its report
on Business Processes for GST on Refund (The 'Refund Report') has provided an exhaustive list
of situations under which refund would arise under GST laws. Refund may be on account of
CGST, SGST or IGST as the case may be. The list of situations is enumerated hereunder:
Sl. Situation in which Refund to be claimed Online GST Manual Application for Refund
No. Refund
Form
1 Excess payment of tax due to mistake or GST RFD-01
inadvertence, if any
2 Excess balance in Electronic Cash Ledger GST RFD- GST RFD-01A
01 Circular No. 24/24/2017 - GST
dated 21st December, 2017

3 Export of services - with payment of tax GST RFD- GST RFD-01A

01 Circular No. 17/17/2017 - GST
dated 15th November, 2017

Export of goods - with payment of tax Shipping Shipping Bill deemed to be the
Bill deemed application for Refund Form
to be the Circular No. 17/17/2017 - GST
application dated 15th November, 2017
for Refund
Form

Export of goods/services - without payment GST RFD- GST RFD-01A

of tax 01 Circular No. 17/17/2017 - GST
dated 15th November, 2017

4 On account of supplies made to SEZ GST RFD- GST RFD-01A

unit/SEZ developer (with payment of tax) 01 Circular No. 17/17/2017 - GST
dated 15th November, 2017

5 On account of supplies made to SEZ GST RFD- GST RFD-01A

unit/SEZ developer (without payment of tax) 01 Circular No. 17/17/2017 - GST
- accumulated ITC dated 15th November, 2017

6 Refund on account of deemed exports - By GST RFD- GST RFD-01A

 the supplier 01
Circular No. 24/24/2017 - GST
dated 21st December, 2017

Refund on account of deemed exports - By the GST RFD-01

recipient
7 On type of Order GST RFD-
(i) Assessment 01
(ii) Provisional Assessment -
Finalization of provisional
assessment.
(iii) Appeal and
(iv) Any other Order
♦ Refund of Pre-deposit for
filing appeal including
refund arising in
pursuance of an appellate
authority's order (when the
appeal is decided in favour
of the appellant)
♦ Payment of duty/tax during
investigation but no/less
liability arises at the time
of finalization of
investigation/adjudication.
8 Credit accumulation due to inverted duty GST RFD- GST RFD-01A
structure i.e. due to tax rate differential 01 Circular No. 24/24/2017 - GST
between output and inputs. dated 21st December, 2017

9 Refund of tax payment on purchases made GST RFD- GST RFD-10

by Embassies or UN bodies. 10 Circular No. 36/10/2018-GST
dated 13th March, 2018

10 Refund by Canteen Stores Department GST RFD- GST RFD-10A

10A Circular No. 60/34/2018-GST
dated 4th September, 2018

11 Tax Refund for International Tourists [Not yet GST RFD-01

operationalized]
12 Tax paid on a supply which is not provided, GST RFD-01
either wholly or partially, and for which
invoice has not been issued (tax paid on
advance payment)
13 Tax paid on an Intra-State supply which is GST RFD-01
subsequently held to be Inter-State supply
 and vice versa (change of POS)
14 Tax paid by the Casual Taxable Person or GST RFD-01
Non-Resident Taxable Person

1.6 -REFUND OPTIONS AVAILABLE AT THE GST COMMON PORTAL

1.6 REFUND OPTIONS AVAILABLE AT THE GST COMMON PORTAL

On navigating Log-In>Services>Refunds>Application for refund, the following options for claiming
refund shall appear as shown below:

1.7 -NO MULTIPLE REFUND APPLICATIONS DURING A SINGLE TAX PERIOD

1.7 NO MULTIPLE REFUND APPLICATIONS DURING A SINGLE TAX PERIOD

Only one Refund application (form RFD-01A) can be filed for each Refund type in a given Return
period. For example, a Taxpayer may choose to file the refund against supplies received on account of
deemed exports, as well as refund of excess balance in Electronic Cash Ledger, which is not related to
any tax period. However, the Taxpayer cannot file two refund applications as recipient of deemed
exports during a single tax period.

1.8 -REFUND IN CASE OF PERSON OPTING TO FILE GSTR-1 ON QUARTERLY BASIS

1.8 REFUND IN CASE OF PERSON OPTING TO FILE GSTR-1 ON QUARTERLY BASIS

In case registered persons having aggregate turnover of up to INR 1.5 crores in the preceding financial
year or the current financial year are opting to file FORM GSTR-1 quarterly (Notification No.
57/2017-Central Tax dated 15th November, 2017), such persons shall apply for refund on a quarterly
basis.

1.9 -REFUND OF TAXES PAID UNDER EXISTING LAWS

1.9 REFUND OF TAXES PAID UNDER EXISTING LAWS
Section 142 of the GST Act, 2017 deals with the miscellaneous transition provisions. Out of 13
sub-section, only 3 sub-sections i.e. section 142(3), section 142(4) and 142(5) deals with
the refund of tax, duty, etc. pertaining to the existing law. The term "existing law" as per
section 2(48) of the GST Act, 2017 means any law, notification, order, rule or regulation relating
to levy and collection of duty or tax on goods or services or both passed or made before the
commencement of this Act by Parliament or any Authority or person having the power to make
such law, notification, order, rule or regulation. All the three sub-sections dealing with the
refunds under the existing laws are reproduced here-in-below for ease of understanding:
Section 142(3) of the GST Act, 2017:
♦ Every claim for refund filed by any person,
 ♦ Before, on or after the appointed day,
♦ For refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid
under the existing law,
♦ Shall be disposed of in accordance with the provisions of existing law,
♦ Any amount eventually accruing to him shall be paid in cash, and
♦ Notwithstanding anything to the contrary contained under the provisions of existing law other
than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of
1944).
However, where any claim for refund of CENVAT credit is fully or partially rejected, the amount
so rejected shall lapse.
However, no refund shall be allowed of any amount of CENVAT credit where such CENVAT
credit as on the appointed day has been transitioned under the GST Act.
Section 142(4) of the GST Act, 2017:
♦ Every claim for refund
♦ Filed after the appointed day
♦ For refund of any duty or tax paid under existing law
♦ In respect of the goods or services exported before or after the appointed day
♦ Shall be disposed of in accordance with the provisions of the existing law.
However, where any claim for refund of CENVAT credit is fully or partially rejected, the amount
so rejected shall lapse.
However, no refund shall be allowed of any amount of CENVAT credit where such CENVAT
credit as on the appointed day has been transitioned under the GST Act.
Section 142(5) of the GST Act, 2017
♦ Every claim filed by a person
♦ After the appointed day
♦ For refund of tax paid under the existing law
♦ In respect of services not provided
♦ Shall be disposed of in accordance with the provisions of existing law
♦ Any amount eventually accruing to him shall be paid in cash, and
♦ Notwithstanding anything to the contrary contained under the provisions of existing law other
than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of
1944).
Section 142(3), 142(4) and 142(5) of the GST Act provide that refunds of tax/duty paid under the
existing law shall be disposed of in accordance with the provisions of the existing law. It is
observed by the CBIC that certain taxpayers have applied for such refund claims in FORM GST
RFD-01A also. In this regard, CBIC vide Circular No. 37/11/2018-GST dated 15th March,
2018 has advised the field formations to reject such applications and pass a rejection order in
FORM GST PMT-03 and communicate the same on the common portal in FORM GST RFD-
01B.
The procedures laid down under the existing laws viz., Central Excise Act, 1944 and Chapter V
of the Finance Act, 1994 read with above referred sub-sections of section 142 of the CGST Act
shall be followed while processing such refund claims.
Furthermore, it has been brought to the notice of the Board that the field formations are rejecting,
withholding or re-crediting CENVAT credit, while processing claims of refund filed under the
existing laws. In this regard, attention is invited to sub-section (3) of section 142 of the CGST
 Act which provides that the amount of refund arising out of such claims shall be refunded in
cash.
Further, the first proviso to the said sub-section provides that where any claim for refund of
CENVAT credit is fully or partially rejected, the amount so rejected shall lapse and therefore,
will not be transitioned into GST.
Furthermore, it should be ensured that no refund of the amount of CENVAT credit is granted in
case the said amount has been transitioned under GST. The field formations are advised to
process such refund applications accordingly.

1.10 -REFUND CLAIMS CAN BE FILED ONLY AFTER FILING VALID GST RETURNS

1.10 REFUND CLAIMS CAN BE FILED ONLY AFTER FILING VALID GST RETURNS
Refund claim for a tax period can be filed only after filing the details in FORM GSTR-1 for the said
tax period. It is also to be ensured that a valid return in FORM GSTR-3B has been filed for the last tax
period before the one in which the refund application is being filed.

1.11 -PROVISIONALLY ACCEPTED ITC BE ALLOWED AS REFUND TEMPORARILY

1.11 PROVISIONALLY ACCEPTED ITC BE ALLOWED AS REFUND TEMPORARILY

It will be allowed for the time being. Since the date of furnishing of FORM GSTR 1 from July, 2017
onwards has been extended while the dates of furnishing of FORM GSTR 2 and FORM GSTR 3 for
such period are yet to be notified, it has been decided by the competent authority to sanction refund of
provisionally accepted input tax credit at this juncture. However, the registered persons applying for
refund must give an undertaking to the effect that the amount of refund sanctioned would be paid back
to the Government with interest in case it is found subsequently that the requirements of clause (c) of
sub-section (2) of section 16 read with sub-section (2) of section 42 of the CGST Act have not been
complied with in respect of the amount refunded.

1.12 -SIGNIFICANCE OF RELEVANT DATE FOR THE PURPOSE OF REFUND

1.12 SIGNIFICANCE OF RELEVANT DATE FOR THE PURPOSE OF REFUND

Relevant Date assumes significance to ascertain whether the refund claim has been filed within the
period of limitation envisaged under the law. Thus, every refund claim is to be filed within 2 years
from the relevant date. The relevant date is different for different scenarios. Thus, different relevant
date is specified for refund on account of export of goods, export of services, accumulated input tax
credit, finalization of provisional assessment, etc.
1.13 -REFUND OF COMPENSATION CESS
1.13 REFUND OF COMPENSATION CESS
Circular No.1/1/2017-Compensation Cess issued by Board clarifies that provisions of section 16
of the IGST Act, 2017, relating to zero rated supply will apply mutatis mutandisfor the purpose
of Compensation Cess (wherever applicable), that is to say that:
(a) Exporter will be eligible for refund of Compensation Cess paid on goods exported by him [on
similar lines as refund of IGST under section 16(3)(b) of the IGST Act, 2017]; or
(b) No Compensation Cess will be charged on goods exported by an exporter under bond and he
 will be eligible for refund of input tax credit of Compensation Cess relating to goods exported
[on similar lines as refund of input taxes under section 16(3)(a) of the IGST Act, 2017].
Thus, refund of compensation Cess (if its on account of zero rated supplies) will be admissible to
the claimant. The process and procedure for claim of such refund will be same as for refund of
IGST (on both goods and services) and in respect of accumulated ITC of compensation cess.
Further, in cases of unutilised ITC of compensation cess availed on inputs in cases where the
final product is not subject to the levy of compensation cess, it has been clarified videCircular
No. 45/19/2018-GST dated 30th May 2018, that refund of accumulated ITC can be claimed in
such situations, however the rebate route i.e. payment of IGST and claiming refund of
compensation cess paid will not be permissible in such cases. In such cases they cannot utilise
the compensation cess paid on inputs for payment of IGST in view of theproviso to section 11(2)
of the Cess Act, which allows the utilization of the input tax credit of cess, only for the payment
of cess on the outward supplies. Accordingly, they cannot claim refund of compensation cess in
case of zero-rated supply on payment of integrated tax.

2.1 -APPLICATION TO BE ACCOMPANIED WITH DOCUMENTARY EVIDENCE

REFUND PROCEDURES
2.1 APPLICATION TO BE ACCOMPANIED WITH DOCUMENTARY EVIDENCE
Section 54(4) of the GST Act, 2017 stipulates that the application for refund shall be accompanied by
the documentary evidences as may be prescribed. The documentary evidences have been prescribed
under Rule 89(2) of the GST Rules, 2017.
Rule Description Documentary Evidence

89(2) Refund in case of Order passed by Reference No. of the Order [Passed by the
(a) ♦ Proper Officer authorities]
♦ An appellate authority
♦ Appellate Tribunal
Copy of the Order [Passed by the authorities]
♦ Court

OR

Reference No. of Payment of amount specified in

section 107(6)

Reference No. of Payment of amount specified in

section 112(8)
89(2)(b) Refund on account of export of goods Statement containing the number & date of Shipping Bill/Bill
of Export
Statement containing the number & date of relevant Export
Invoices
89(2)(c) Refund on account of export of services Statement containing the number & date of Invoices
 Statement containing the number & date of BRC/FIRC
89(2)(d) Refund on account of supply of goodsmade to Statement containing the number & date of Invoices in Rule 46
SEZ unit/developer
Evidence regarding the endorsement specified in the 2nd
proviso to Rule 89(1)
89(2)(f) If supplier claims refund - Then a Declaration to the effect that
SEZ unit/developer has not availed ITC
89(2)(e) Refund on account of supply of servicesmade Statement containing the number & date of Invoices
to SEZ unit/developer
Evidence regarding the endorsement specified in the 2nd
proviso to Rule 89(1)
Details of payment along-with proof made by the recipient to
the supplier for authorised operations as defined under the SEZ
Act, 2005
89(2)(f) If supplier claims refund - Then a Declaration to the effect that
SEZ unit/developer has not availed ITC
89(2)(g) Refund on account of Deemed Exports Statement containing the number & date of Invoices
Evidence as may be notified by the Government
89(2)(h) Refund on account of Inverted tax structure Statement containing the number & date of
[Other than NIL rated or fully exempt Invoices receivedduring a tax period
supplies]
Statement containing the number & date of
Invoices issuedduring a tax period
89(2)(i) Refund on account of finalisation of Reference Number of the Final Assessment Order
provisional assessment
Copy of the Final Assessment Order
89(2)(j) Where CGST & SGST was paid but Statement showing details of such transactions
subsequently it was held that IGST shall be
paid
89(2)(k) Refund on account of excess payment of tax Statement showing details of the amount of claim

  

2.2 -DECLARATION/CERTIFICATION, AS THE CASE MAY BE, THAT THE INCIDENCE OF

TAX AND ...

2.2 DECLARATION/CERTIFICATION, AS THE CASE MAY BE, THAT THE INCIDENCE OF

TAX AND INTEREST HAS NOT BEEN PASSED ON TO ANY OTHER PERSON
Section 54(4)(b) of the GST Act, 2017 requires the documentary or other evidence (including the
documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and
interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed
was collected from, or paid by him and the incidence of such tax and interest had not been passed on to
any other person.
In this respect, the proviso to the aforesaid section read with Rule 89(2)(l) and Rule 89(2)(m) of the
GST Rules, 2017 has prescribed different provisions based on the quantum of claim of refund.
Description Refund Claim upto INR Refund Claim exceeding INR 2,00,000
2,00,000
Rule 89(2)(l) 89(2)(m)
Requirement Declaration Certificate in Annexure 2 of Form GST RFD-01 issued by a
Chartered Accountant or a Cost Accountant
Purpose of Declaration/Certificate Incidence of such tax and interest had not been passed on to any other person

Cases in which no Cases covered under clause (a) or clause (b) or clause (c) or clause (d) or
requirement of clause (f) of sub-section (8) of section 54
Declaration/Certificate (a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs
or input services used in making such zero-rated supplies
Presently, under section 16(3) of IGST Act, only the supplier making supplies of
goods and/or services to the SEZ unit/developer can claim refund. It is proposed to
allow ITC to SEZ unit/developer and the supplier in DTA may recover the tax
amount from such SEZ unit/developer. Accordingly, section 54(8)(a) has been
amended which reads as 'refund of tax paid on export of goods or services or both
or on inputs or input services used in making such exports vide The Central Goods
and Services Tax (Amendment) Act, 2018 with effect from the date to be notified.
(b) refund of unutilised input tax credit under sub-section (3)
(c) refund of tax paid on a supply which is not provided, either wholly or partially, and
for which invoice has not been issued, or where a refund voucher has been issued
(d) refund of tax in pursuance of section 77
(f) the tax or interest borne by such other class of applicants as the Government may,
on the recommendations of the Council, by notification, specify
Applicability of concept of unjust enrichment in GST
The Hon'ble Supreme Court in the case of Sahakari Khand Udyog Mandal Ltd. v. Commissioner of
Central Excise & Customs as reported in 2005 (181) ELT 328 S.C. has defined 'unjust enrichment'
as under:
(a) '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.
(b) That no person can be allowed to enrich inequitably at the expense of another.
A right of recovery under the doctrine of 'unjust enrichment' arises where retention of a benefit is
considered contrary to justice or against equity. The concept is inbuilt in section 54(5) read with 54(8)
of the CGST Act, 2017. Every claim of refund sanctioned will be credited to the Consumer Welfare
Fund in terms of section 54(5) of CGST Act, 2017. It will, instead of being credited to the fund, be paid
to the claimant in situations mentioned in Section 54(8). Thus, the principle will not apply to refund
claims arising on account of zero rated supply, refund of accumulated ITC on account of zero rated
supply and inverted rate structure, where wrong tax is paid (IGST instead of CGST+SGST & vice
versa), where tax has been paid on advances but no supply is made and no invoice has been issued.
These are cases where the principle of unjust enrichment is not applicable and the proper officer need
not satisfy himself whether the incidence of tax has been passed on to any other person in such cases.
In all other cases, refund will be sanctioned to the claimant only if the claimant demonstrates that the
incidence of tax has not been passed on to any other person.

2.3 PROCESSING OF REFUND CLAIM

As per section 54(5) of the GST Act, 2017, if, on receipt of any refund application, the proper officer is
satisfied that the whole or 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 Fund referred to in section 57.
2.4 ACKNOWLEDGEMENT OF THE REFUND CLAIM APPLICATION
2.4-1 Application relates to refund from Electronic Cash Ledger
Where the application relates to a claim for refund from the electronic cash ledger, an
acknowledgement in FORMGST RFD-02 shall be made available to the applicant through the
common portal electronically, clearly indicating:
♦ The date of filing of the claim for refund and
♦ The time period i.e. 60 days specified in section 54(7) shall be counted from such date of filing.
2.4-2 Application relates to refund other than from Electronic Cash Ledger
The application for refund, other than claim for refund from electronic cash ledger:
♦ The application shall be forwarded to the proper officer
♦ The proper officer shall, within a period of 15 days of filing of the said application, scrutinize
the application for its completeness and
♦ Where the application is found to be complete in terms of Rule 89(2), 89(3) and 89(4).
♦ An acknowledgement in FORM GST RFD-02 shall be made available to the applicant through
the common portal electronically. (See Appendix).
♦ The acknowledgement shall clearly indicate the date of filing of the claim for refund and the
time periodi.e. 60 days specified in section 54(7) shall be counted from such date of filing.

2.5 -DEFICIENCIES IN THE REFUND APPLICATION

2.5 DEFICIENCIES IN THE REFUND APPLICATION

Fresh application for refund in case deficiency memo is issued: Where any deficiencies are noticed,
the proper officer shall communicate the deficiencies to the applicant in FORM GST RFD-03 through
the common portal electronically, requiring him to file a fresh 'refund' application after rectification
of such deficiencies.
CBIC vide Circular No. 59/33/2018-GST dated 4th September, 2018 stipulated that the intent of the
law is very clear that in case a deficiency memo in FORM GST RFD-03 has been issued, the refund
claim will have to be filed afresh.
However, based on the representations filed to the CBIC, it has been observed that
presently www.gst.gov.in does not allow a taxpayer to file a fresh application for refund once a
deficiency memo has been issued against an earlier refund application FOR THE SAME PERIOD.
Therefore, it has been clarified by CBIC vide Circular No. 70/44/2018-GST dated 26th October,
2018 that till the time such facility is developed on www.gst.gov.in, taxpayer would be required to:
♦ Submit the rectified refund application
♦ Under the earlier Application Reference Number (ARN) only
It is further clarified vide Circular No. 79/53/2018-GST dated 31st December, 2018 that the rectified
application, which is to be treated as a fresh refund application, will be submitted manually in the
office of the jurisdictional proper officer.
Re-credit of amount in Electronic Credit Ledger where deficiency memo has been
communicated: Further, rule 93(1) of the CGST Rules provides that where any deficiencies have
been communicated under rule 90(3), the amount debited under rule 89(3) shall be RE-CREDITED to
the electronic credit ledger.
Re-credit on hold: However, in view of the functionality to file fresh refund application not been
available at www.gst.gov.in, it has been reiterated by the CBIC vide Circular No. 70/44/2018-GST
dated 26th October, 2018that when a deficiency memo in FORM GST RFD-03 is issued to taxpayers:
♦ Re-credit in the Electronic Credit Ledger (using Form GST RFD-01B) is not required to be carried out, and
♦ Rectified refund application would be accepted by the jurisdictional tax authorities with the earlier ARN itself.
Clarification to be separately issued where re-credit has already been done: It has been reiterated
by the CBICvide Circular No. 70/44/2018-GST dated 26th October, 2018 that a separate clarification
would be issued by the CBIC in cases where a deficiency memo in FORM GST RFD-03 is issued to
taxpayers and re-credit has been done.
Deficiency memo to be issued only once against one refund application for particular tax
period: CBIC videCircular No. 37/11/2018-GST dated 15th March, 2018 stated that clarification has
been sought from CBIC
♦ Whether with respect to a refund claim, deficiency memo can be issued more than once?
In this regard, Rule 90(3) of the GST Rules clearly stipulates that once an applicant has been
communicated the deficiencies in respect of a particular application, the applicant shall furnish a fresh
'refund' application after rectification of such deficiencies.
It is, therefore, clarified that there can be only 1 deficiency memo for 1 refund application and once
such a memo has been issued, the applicant is required to file a fresh refund application, manually in
FORM GST RFD-01A. This fresh application would be accompanied with:
♦ The original ARN,
♦ Debit entry number generated originally, and
♦ A hard copy of the refund application filed online earlier.
It is further clarified that once an application has been submitted afresh, pursuant to a deficiency
memo, the proper officer will not serve another deficiency memo with respect to the application for
the same period, unless the deficiencies pointed out in the original memo remain unrectified, either
wholly or partly, or any other substantive deficiency is noticed subsequently.
No issuance of Show Cause Notice (SCN) where refund application is not re-submitted after
issuance of Deficiency Memo: It has been learnt by the CBIC that certain field formations are issuing
show cause notices to the claimants in cases where the refund application is not re-submitted after the
issuance of a deficiency memo. These show-cause-notices are being subsequently adjudicated
and orders are being passed in FORM GST RFD-04/06. It is clarified vide Circular No. 59/33/2018-
GST dated 4th September, 2018 that show-cause-notices are not required to be issued where deficiency
memos have been issued. A refund application which is re-submitted after the issuance of a deficiency
memo shall have to be treated as a fresh application. No order in FORM GST RFD-04/06 can be issued
in respect of an application against which a deficiency memo has been issued and which has not been
resubmitted subsequently.
Deficiency communicated under SGST Rules shall be deemed to be communicated under CGST
also: Where deficiencies have been communicated in FORM GST RFD-03 under the State Goods and
Service Tax Rules, 2017, the same shall also deemed to have been communicated under CGST Rules
also.
  

2.6 -PROCESSING OF REFUND CLAIM ON ACCOUNT OF ZERO-RATED SUPPLY

2.6 PROCESSING OF REFUND CLAIM ON ACCOUNT OF ZERO-RATED SUPPLY

The processing of refund claim on account of zero-rated supply is dealt under section 54(6) of the
GST Act, 2017 and Rule 91 of the GST Rules, 2017. The proper officer may, in the case of any claim
for refund on account of zero-rated supply of goods or services or both made by registered
persons refund on a provisional basis:
♦ 90% of the total amount so claimed ,
♦ excluding the amount of input tax credit provisionally accepted ,
♦ In such manner and subject to such conditions, limitations and safeguards as may be prescribed. The same has been
prescribed under Rule 91 of the GST Rules, 2017.
It is pertinent to note that Government has reserved that power to notify category of registered persons
on the recommendations of the Council on which such provision may not be applicable. However,
there is no such notification issued by CBIC as on date.
Condition: The person claiming refund has during any period of 5 years immediately preceding the
TAX PERIODto which the claim for refund relates, not been prosecuted for any offence under
the Act or under an existing lawwhere the amount of tax evaded exceeds INR 2.5 crores.
♦ Thereafter the proper officer will scrutinize the application and the evidence submitted
♦ On being prima facie satisfied, he shall make a provisional refund order in FORM GST RFD-04sanctioning the
amount of refund due to the said applicant on a provisional basis.

♦ The order shall be made an order within a period not exceeding 7 days from the date of the
acknowledgement under Rule 90(1) or Rule 90(2).
♦ After the order is issued, the proper officer shall issue a payment advice in FORM GST RFD-05 for the amount
sanctioned under Rule 91(2).

♦ Based on the payment advice, the amount shall be electronically credited to any of the bank accounts of the
applicant mentioned in his registration particulars and as specified in the application for refund.
♦ Post provisional sanction of refund amount in GST RFD-04, the proper officer shall make an order (in Form GST
RFD-06) under section 54(5) for final settlement of refund claim after due verification of documents furnished by
the applicant.
Processing of claims finally after sanction of provisional refund
After sanction of the provisional refund, final order is to be issued within 60 days (after due
verification of the documentary evidences) of the date of receipt of the complete application form. The
proper officer has to validate the refund statement details with details in Form GSTR-1 (or Table 6A of
Form GSTR-1) available on the common portal. Details of IGST paid, in case of export of services on
payment of IGST, also needs to be verified from Form GSTR 3 or Form GSTR 3B as the case may be,
filed by the applicant and it needs to be verified that the refund amount claimed shall be less than the
tax paid on account of zero rated supplies as per Form GSTR-3 or 3B as the case may be. In case of
export under bond/LUT, debit to the electronic credit ledger need to be checked up. If the sanctionable
amount is less than the applied amount or if the refund claim is proposed to be rejected, then a notice
has to be issued to the applicant in Form GST RFD-08. The applicant has to reply within 15 days of
receipt of notice in Form GST 09. Principles of natural justice will have to be followed before making
the final decision. Final order will be made by the proper officer in Form GST RFD-06.
Provisional Refund is not allowable for all type of refunds under GST
Section 54(6) of CGST Act provides for grant of provisional refund of 90% of the total refund claim, in
case the claim relates to refund arising on account of zero rated supplies. Thus, only refund claims
where refund arises on account of zero rated supply will be entitled to provisional refund.
   

2.7 -ORDER SANCTIONING REFUND

2.7 ORDER SANCTIONING REFUND

Upon submission of refund application, the proper officer shall carry out the examination process. He
shall examine if the refund claim amount is due and payable under section 54(5) to the applicant. If
the same is due and payable then he shall make an order in FORM GST RFD-06
♦ Sanctioning the amount of refund to which the applicant is entitled,
♦ He should also mention therein the amount, if any, refunded to him on a provisional basis in case of zero-rated
supply under section 54(6),
♦ Amount adjusted against any outstanding demand under the Act or under any existing law and
♦ The balance amount refundable

However, in cases where the amount of refund is completely adjusted against any outstanding
demand under:
♦ The GST Act or
♦ Any existing law,
an order giving details of the adjustment shall be issued in Part A of FORM GST RFD-07.