Dear Members,

The  GST Policy Wing, Central Board of Indirect Taxes and Customs(CBIC) has issued Circular No. 147/03/2021-GST  dated 12th March 2021 clarifying various refund related issues.

For the convenience of the members, the gist of clarifications  is provided as follows:

1. Clarification in respect of refund claim by recipient of Deemed Export Supply

The Circular has clarified that that there is no restriction on recipient of deemed export supplies in availing ITC of the tax paid on such supplies when the recipient files for refund claim.

The Para 41 of Circular No. 125 Dated 18.11.2019 to this aspect has been modified vide this circular. 

However, it is to ensure that no dual benefit to the claimant, the portal allows refund of only Input Tax Credit (ITC) to the recipients which is required to be debited by the claimant while filing application for refund claim. Therefore,  whenever the recipient of deemed export supplies files an application for refund, the portal requires debit of the equivalent amount from the electronic credit ledger of the claimant.

2. Extension of relaxation for filing refund claim in cases where zero-rated supplies has been wrongly declared in Table 3.1(a).

Where GST was recorded wrongly in table 3.1(a) instead of 3.1(b) of GSTR3B and were unable to claim refund of IGST refund as the period was only from 01.07.2017 to 30.06.2019. 

Para 26 of the Circular No. 125 Dated 18.11.2019 has been modified to change the date from 01.07.2017 to 31.03.2021.

3.  The manner of calculation of Adjusted Total Turnover under sub-rule (4) of Rule 89 of CGST Rules, 2017

Doubts have been raised as to whether the restriction on turnover of zero-rated supply of goods to 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, imposed by amendment in definition of the “Turnover of zero-rated supply of goods” vide Notification No. 16/2020-Central Tax dated 23.03.2020, would also apply for computation of “Adjusted Total Turnover” in the formula given under Rule 89 (4) of CGST Rules, 2017 for calculation of admissible refund amount.

The Circular Notices that “Adjusted Total Turnover” includes “Turnover in a State or Union Territory”, as defined in Section 2(112) of CGST Act. As per Section 2(112), “Turnover in a State or Union Territory” includes turnover/ value of export/ zero-rated supplies of goods.

The definition of “Turnover of zero-rated supply of goods” has been amended vide Notification No.16/2020-Central Tax dated 23.03.2020, as detailed above. In view of the above, it can be stated that *the same value of zero-rated/ export supply of goods, as calculated as per amended definition* of “Turnover of zero-rated supply of goods”, need to be taken into consideration while calculating “turnover in a state or a union territory”, and accordingly, in “adjusted total turnover” for the purpose of sub-rule (4) of Rule 89.

Thus, the restriction of 150% of the value of like goods domestically supplied, as applied in “turnover of zero-rated supply of goods”, *would also apply to the value of “Adjusted Total Turnover”* in Rule 89 (4) of the CGST Rules, 2017

The circular also provides an illustration example for the clarification of the above. 

Members are requested to take note of these clarifications.  For full details, you may refer to the above said circular using below link-

https://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular_Refund_147.pdf

Feed-backs,  if any may also be sent to the council on e-mail ids:-  deepak.gupta@chemexcil.gov.in, pwdd@chemexcil.gov.in  and    info@chemexcil.gov.in      for   records/ taking it further, if needed.

Thanking You,

Yours faithfully,

Deepak Gupta
Acting Executive Director
CHEMEXCIL