Question29:

1. The party have made zero rated supply of exempted goods i.e. Rice without submission of LUT. Then the party have applied for Refund for accumulated ITC under section 54(3)(i) of CGST ACT,2017 through submission of RFD-01A. Now the question: did they violate any GST Rule as mentioned in 96A of CGST Rules, 17 for not applying for LUT prior such Zero Rated Supply. Secondly, are they eligible for such refund under section 54(3)(i) of CGST ACT,2017.
2.   In another case, the party have not taken LUT for IGST exemption as required under Rule, 96A of CGST Rules, 2017. However they made Zero Rated supply and later submitted Refund application for the category falls under section 54(3)(i) of CGST ACT,2017 . Now the question is did they contravene the Rule for such supply. If they have made any violation of law then how much penalty do they need to pay and under which provision. If refund case needs to settle then what is the best way to finalize this claim. How will they pay penalty amount if any they are liable to pay alongside the settlement of the claim.

Answer:
Point wise reply of your query are as follows:-
1. LUT was required to be furnished before effecting export according to section 96 A and Yes, you violate this provision. But refund claim being fundamental right and can't be rejected for technical lapses.
2. Since LUT has not been furnished before export thus department may impose General penalty under Section 125  of CGST for not following export procedure  which may extend to twenty five thousand rupees. But you should pay penalty only after it is imposed. There are a chances of waiver of penalty. (REPLY dt. 06/03/2018)