QUESTION

Mr. A export goods with payment of IGST and also sell goods to merchant exporter with 0.1% GST, so can he get refund of IGST with payment of tax from customs and also can he apply for Inverted duty tax structre refund from GST department?

ANSWER

FACTS OF THE CASE:

A exports goods on payment of IGST and also supplies to merchant exporter. Can refund be applied for IGST on export and also for inverted duty structure for sale to merchant exporter.

LAW APPLICABLE:

SECTION 16 of IGST Act
(1) 'zero rated supply' means any of the following supplies of goods or services or both, namely:''
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
------------------------------------------

(3) A registered person making zero rated supply shall be eligible to claim refund under either of the following options, namely:''
(a) 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 unutilised input tax credit; or
(b) 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 of the Central Goods and Services Tax Act or the rules made thereunder.

SECTION 54 OF CGST ACT

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:
Provided that no refund of unutilised input tax credit shall be allowed in cases other than''
(i) zero rated supplies made without payment of tax;
(ii) 'where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council:

Circular No.37/11/2018-CGST

13.2 It is also clarified that the exporter will be eligible to take credit of the tax @ 0.05% / 0.1% paid by him. The supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure as per the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act.

INTERPRETATION:

Export of goods are considered as zero rated supply as per section 16(1) of IGST Act. Further as per section 16(3) of IGST Act, tax paid on exported goods is eligible for refund in accordance with provisions of section 54 of CGST Act.

Although supplies to merchant exporter is not considered as Zero rated supply as per section 16(1) of IGST Act. Vide Circular No.37/11/2018-CGST it is clarified that the supplier who supplies goods at the concessional rate is also eligible for refund on account of inverted tax structure.

CONCLUSION:

Both the refunds are different, refund related to export of goods can be filed u/s 16(3) in accordance with provisions of section 54 and refund related to supplies to merchant exporter can be filed u/s 54(3)(ii). (Reply dt. 25/05/2022 )