List of Procedures to File and Claim GST Refund

Table of Contents

1. Application to be accompanied with documentary evidence
2. Declaration/Certification
3. Processing of refund claim
4. Filing of application for claiming refund in GST RFD-01

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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.

However, it is significant to note that CBIC vide Circular No. 125/44/2019- GST dated 18th November, 2019 has issued a detailed list of documentary evidence that is required to be filed with each type of refunds. For the ease of reference, each set of documentary evidence is incorporated in each chapter dealing with respective refunds.

2. Declaration/Certification

Section 54(4)(b) of the GST Act, 2017 requires the documentary or other evidence 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.

2.1 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 section 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 exports, refund of accumulated ITC on account of exports 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.

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.

3.1 Processing of claiming refund through GST RFD-01 with effect from 26th September, 2019

CBIC has clarified that as the necessary capabilities for making the refund procedure fully electronic, in which all steps of submission and processing shall be undertaken electronically, have been deployed on the common portal with effect from 26th September, 2019, therefore, a new set of procedures has been prescribed vide Master Circular No. 125/44/2019-GST dated 18th November, 2019.

The Master Circular has been prescribed in supersession of earlier Circulars viz. Circular No.

• 17/17/2017-GST dated 15.11.2017,
• 24/24/2017-GST dated 21.12.2017,
• 37/11/2018-GST dated 15.03.2018,
• 45/19/2018-GST dated 30.05.2018 (including corrigendum dated 18.07.2019),
• 59/33/2018-GST dated 04.09.2018,
• 70/44/2018-GST dated 26.10.2018,
• 79/53/2018-GST dated 31.12.2018 and
• 94/13/2019-GST dated 28.03.2019.

However, the provisions of the aforesaid Circulars shall continue to apply for all refund applications filed on the common portal before 26th September, 2019 and the said applications shall continue to be processed manually as prior to deployment of new system.

3.2 Linking of Aadhaar with refund

37th GST Council meeting held on 20th September, 2019 has recommended to examine the possibility of making Aadhaar mandatory for claiming refunds.

In this regard, rule 89(1) has been amended vide Notification No. 35/2021 – Central Tax dated 24-9-2021, with effect from the date as may be notified, to give effect to the said proposal of making the Aadhaar authentication mandatory for claiming refunds by subjecting it to rule 10B. Rule 10B of the CGST Rules, 2017 stipulates that

the registered person, other than a person notified under sub-section (6D) of section 25, who has been issued a certificate of registration under rule 10 shall, undergo authentication of the Aadhaar number of the proprietor, in the case of proprietorship firm, or of any partner, in the case of a partnership firm, or of the karta, in the case of a Hindu undivided family, or of the Managing Director or any whole time Director, in the case of a company, or of any of the Members of the Managing Committee of an Association of persons or body of individuals or a Society, or of the Trustee in the Board of Trustees, in the case of a Trust and of the authorized signatory, in order to be eligible for the purpose of filing refund application in Form GST RFD-01 under rule 89 of the CGST Rules, 2017. However, as per proviso to rule 10B, if Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents, namely:-

(a) her/his Aadhaar Enrolment ID slip; and

(b) (i) Bank passbook with photograph; or

(ii) Voter identity card issued by the Election Commission of India; or

(iii) Passport; or

(iv) Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988 (59 of 1988):

Provided further that such person shall undergo the authentication of Aadhaar number within a period of thirty days of the allotment of the Aadhaar number.

4. Filing of application for claiming refund in GST RFD-01

CBIC vide Master Circular No. 125/44/2019-GST dated 18th November, 2019 has clarified that:

• Application to be filed on www.gst.gov.in: FORM GST RFD-01 shall be filled on the common portal by an applicant seeking refund under any of the categories mentioned below:

(a) Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;

(b) Refund of tax paid on export of services with payment of tax;

(c) Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;

(d) Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;

(e) Refund of unutilized ITC on account of accumulation due to inverted tax structure;

(f) Refund to supplier of tax paid on deemed export supplies;

(g) Refund to recipient of tax paid on deemed export supplies;

(h) Refund of excess balance in the electronic cash ledger;

(i) Refund of excess payment of tax;

(j) Refund of tax paid on intra-State supply which is subsequently held to be inter-State supply and vice versa;

(k) Refund on account of assessment/provisional assessment/appeal/any other order;

(l) Refund on account of “any other” ground or reason.

• All other statement, documents, etc. is integral part of GST RFD-01: The filing of FORM GST RFD-01 shall entail filing of statements/declarations/undertakings which are part of FORM GST RFD-01 itself, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim.
• List of documents has been specified: A comprehensive list of such documents has been encapsulated in the Annexure A of the Master Circular No. 125/44/2019-GST dated 18th November, 2019.
• No other documents at the stage of filing: It has been clarified vide the same Circular that no other document needs to be provided by the applicant at the stage of filing of the refund application.
• Facility to upload documents: The facility of uploading these other documents/invoices shall be available on the common portal where 4 documents, each of maximum 5MB, may be uploaded along with the refund application.
• No requirement of physical submission of application: Neither the refund application in FORM GST RFD-01 nor any of the supporting documents shall be required to be physically submitted to the office of the jurisdictional proper officer.

4.1 Change in manner of claim as well as grant of refund of tax paid on supplies other than zero rated supplies

For the refund of tax paid falling in categories specified at S. Nos. (i) to (l) above i.e. refund claims on supplies other than zero rated supplies, no separate debit of ITC from electronic credit ledger is required to be made by the applicant at the time of filing refund claim, being claim of tax already paid. However, the total tax would have been normally paid by the applicant by debiting tax amount from both electronic credit ledger and electronic cash ledger. At present, in these cases, the amount of admissible refund, is paid in cash even when such payment of tax or any part thereof, has been made through ITC.

In the personal view of the author, though there are other categories also like exports/supplies to SEZ unit or developer on payment of IGST and deemed exports where the payment can be made using both cash and credit but refund is granted wholly in Cash, the reason why proportionate refund in cash and credit has been done only for (i) to (l) categories because here artificial construction is possible to liquidate credit in cash by doing wrong payment, excess payment, etc. But in case of zero-rated supply, refund is in cash even though payment made through credit is to promote zero-rated supplies by having enough liquidity in hand.