zero rated supply Procedure of Export and claiming of Refund under GST

Procedure of Export and claiming of Refund under GST regime

After implementation of GST, the exports have been categorized as zero rated supply and hence duties or taxes paid either on inputs/ inputs services or on final products, are to be refunded. The new regime hence provides two options for making exports.

Any person making zero rated supply (i.e. any exporter) shall be eligible to claim refund under either of the following options, namely: –

- he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit; or
- he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax and claim refund of such tax paid on goods or services or both supplied, in accordance with the provisions of section 54 (Refunds) of the Central Goods and Services Tax Act or the rules made there under (i.e. the Central Goods and Service Tax Rules, 2017).

For the option (a) above, procedure to file refund has been outlined in the Central Goods and Service Tax Rules, 2017. The exporter claiming refund of unutilized input tax credit will file an application electronically through the Common Portal of GST, either directly or through a Facilitation Centre notified by the GST Commissioner. The application shall be accompanied by documents as prescribed in the said rules. Application for refund shall be filed only after the export manifest or an export report, as the case may be, is delivered under section 41 of the Customs Act, 1962 in respect of such goods.

As per the provisions of Rule 89 to 90 of the CGST Rules, 2017 summarized refund procedure are as follows.

Application shall be filed in FORM GST RFD-01, Such application shall be filed electronically through the common portal of GST or through a Facilitation Centre notified by the Commissioner:
The above application shall be accompanied by documentary evidence in Annexure 1 in Form GST RFD-01, to establish that a refund is due to the applicant, namely

- a statement containing the number and date of shipping bills or bills of export and the number and the date of the relevant export invoices, in a case where the refund is on account of export of goods;
- a statement containing the number and date of invoices and the relevant Bank Realization Certificates or Foreign Inward Remittance Certificates, as the case may be;
- The details of the relevant export invoices contained in FORM GSTR-1 shall be transmitted electronically by the common portal of GST to the Customs system.

1. Where the application relates to refund of input tax credit, the electronic credit ledger shall be debited by the applicant by an amount equal to the refund so claimed.
2. In this Case the refund of input tax credit shall be granted as per the following formula – Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover
3. Acknowledgement.– (1) Where the application relates to a claim for refund from the electronic cash ledger, an acknowledgement in FORM GST 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 of 60 days <Sec-54(7)> shall be counted from such date of filing

The application for refund shall be forwarded to the proper officer who 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 sub-rule (2), (3) and (4) of rule 89, an acknowledgement in FORM GST RFD-02 shall be made available to the applicant through the common portal electronically.
The proper officer, after scrutiny shall make an order in FORM GST RFD-04, sanctioning the amount of 90% refund due to the said applicant on a provisional basis within a period not exceeding seven days from the date of the acknowledgement.

For the option (b), following are the summarized procedure

A registered person shall not be required to file any application for refund of IGST paid on supply of goods for exports. The shipping bill, having inter-alia GST invoice details, filed by an exporter shall be deemed to be an application for refund of integrated tax paid on the goods exported out of India.
Such application shall be deemed to have been filed only when the person in charge of the conveyance carrying the export goods duly files an export manifest or an export report covering the number and the date of shipping bills or bills of export and the applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR- 3B, as the case may be;

The details of the relevant export invoices contained in FORM GSTR-1 shall be transmitted electronically by the common portal of GST to the Customs system. Now the Custom system shall in turn electronically transmit back to the common portal a confirmation that the goods covered by the said invoices have been exported out of India.

Further, the Custom system on receipt of information regarding furnishing of valid return in FORM GSTR-3 from the common portal, the Customs system shall process the claim for refund and an amount equal to the IGST paid in respect of each shipping bill or bill of export shall be electronically credited to the bank account of the applicant.

Government has allowed a grace period to the registrants to file returns under the new GST Law. Therefore, this refund procedure shall as a consequence come into operation only when the registrants file the above mentioned returns.

Further, the exporters are free to avail option (a) or option (b). The refund shall be governed by the provisions of the section 16 of the IGST Act.

ARE-1 procedure which was being followed under excise laws is dispensed with except in respect of commodities to which provisions of Central Excise Act would continue to be applicable.

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