Question

As per Para 4 of Cir 17/17/2017-GST ` The payment of sanctioned refund amount shall made only the respective tax authority of the Centre or State Govt. In short till the period up to Mar-2018 in RFD01A form to CLAIM REFUND OF ACCUMULATED ITC on account of ZERO RATED SUPPLY EXPORT. The provision was to debit the eligible refund amount calculated in respective head i.e. IGST, CGST and SGST. as well balance was also availble in these three head and exporter were debited the eligible refund amount of respective head with closing balance of respective head only. i.e. if eligible refund amount of IGST is Rs.100 and closing balance at the time of filing refund is 10 then Rs. 90 were to be lapsed and exporter were proceeding further for refund of Rs.10 only. Looking after the difficulties to the exporter GST council has brought the changed in form itslef in the month of April-2018 ( but not issued any clarification or circular in this regards) removed the restriction of use of balance as well as major change is eligbile refund amount is now not available head wise and same is avialble in clubbed form. At the time of debiting also if total clubbed amount was available in any of the head then the said format was allowing to debit the same. Accordingly exporters filed the refund claims and department also processed the same and credited the refunds. The intention of govt was exporter should not loose their substantial right of ITC refund due to export which was lapsed in earler form restriction. Further on 4.9.2018 Circular has issued No 59/2018 and prescribed the manner for debiting the eligible refund but still same was allowing to use either of head balances to get total clubbed eligible refund amount and there was no any state aurhority barrier. The manner prescribed is eligible refund amount first to be debited in IGST and if balance is not sufficient then balance should be debited equally in CGST and SGST and still if any of the head balance is not sufficient then balance amount can be debited in head where the sufficient balance is available. We filed refund claim in Aug-2018 before cirular dated 4.9.2018 and claimed the entire refund amount in closing balance of CGST head as other commissionerate also sanctioning the refund claim in that manner as well as there was no restriction in form itself and there was no debit manner prescribed by govt ( which is latter on 4.9.2018 provided by Cir 59) Now our refund is rejected by department stating that though the restriction was removed in amended form April-2018 exporter should have followed the Circular No 17/17/2017 and hence refund amount of SGST head ( which is calculated by dept as per format prior to amendment i.e. format used in march-18) Rs. 50 Lakh rejected by department. In the amendment cirular dt 4.9.2018 there is clear instruction specified that ` Procedure in Para 3.2( i.e. manner of debit) however is not presently available on common portal, Till the time such facility is made available on common portal the taxpayer advised to follow the order as explained above for all refund applications filed after the date of circular. HOWEVER FOR APPLICATIONS ALREADY FILED AND PENDING WITH THE TAX AUTHORITY WHERE THIS ORDER IS NOT ADHERED BY CLIMENT NO ADVERSE VIEW MAY BE TAKEN BY THE TAX AUTHORITY. STILL THE REFUND REJECTED BY DEPARTMENT Query NEED YOUR VIEW TO PROCEED TO FILE APPEAL AND ANY CASE LAW ON SAME SUBJET MATTER. AS WELL AS LEGAL POSITION OF ABOVE MATTER. ALSO please let us know whether pre deposit of 10% will be required to be paid. Also please confirm whether we can depand in our appeal for Interest @6% unde section 56 of CGST Act

Answer

You have rightly said that as per Circular No.59 /2018 prescribed the manner for debit the maximum refund amount from Electronic credit ledger will be applicable only after the issue of of aforesaid circular i.e. 4.09.2018. Para 3.3 of said circular also clarified that "for applications already filed and pending with the tax authorities, where this order is not adhered to by the claimant, no adverse view may be taken by the tax authorities".

Now as per Section 107 of CGST Act, any person aggrieved by any decision or order passed under this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act by an adjudicating authority may appeal to such Appellate Authority as may be prescribed within three months from the date on which the said decision or order is communicated to such person.

Therefore for filing an appeal you are required to have an order in hand against which you want to file an appeal.
So firstly ask the jurisdiction Officer to pass an order for rejection of refund.

So far as pre deposit is concerned, it is only paid for liability demanded by the authority in the order. Your case is related to refund and not liability therefore there is no need for pre deposit.

Yes, you can demand for interest @ 6% on the basis of below mentioned provision of section 54.

54(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

(12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained insection 56, be entitled to interest at such rate not exceeding six per cent. as may be notified on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund. (Reply dt.19/12/2018)