QUESTION

Is it compulsory for a Merchant Exporter to claim refund under Rule 89(4B) only? A merchant exporter is procuring inputs @ 0.1% and also procuring other services. Now, he does not intend to claim refund of 0.1% ITC. In that case, can he claim refund of ITC of other input & input services used in making zero rated supply under Rule 89(4)? Plain reading of Rule 89(4) and 89(4B) suggest that one can make application under both the options. Only if a merchant exporter also wants to claim refund of 0.1%, he has to go through Rule 89(4B) and file application under ‘Any Other’ category. However, for making refund claim of other ITC, he can also make application under Rule 89(4). Kindly give your valuable opinion in this regard

ANSWER

Facts of the case:  A merchant exporter is procuring inputs @ 0.1% and also procuring other services. Whether a merchant exporter claiming refund of 0.1%, through Rule 89(4B) and filing application under ‘Any Other’ category is required to make application under rule 89(4) for claiming any other ITC.
 
Law Applicable: CGST RULE 89
(4B) Where the person claiming refund of unutillised input tax credit on account of zero rated supplies without payment of tax has '

(a) received supplies on which the supplier has availed the benefit of the Government of India, Ministry of Finance, notification No. 40/2017-Central Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1320 (E), dated the 23rd October, 2017 or notification No. 41/2017-Integrated Tax (Rate), dated the 23rd October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1321(E), dated the 23rd October, 2017; or

the refund of input tax credit, availed in respect of inputs received under the said notifications for export of goods and the input tax credit availed in respect of other inputs or input services to the extent used in making such export of goods, shall be granted.

Interpretation: Notification no 40/2017 CT(R) only provides facility to the merchant exporter to procure goods at  lower rate of tax.

Rule 89(4B) provides that the refund of input tax credit, availed in respect of inputs received under the said notifications for export of goods and the input tax credit availed in respect of other inputs or input services to the extent used in making such export of goods, shall be granted.

Thus it clearly indicates that you can take both the refunds through Rule 89(4B) i.e. of 0.1% and other ITC.

Conclusion: You can take both the refunds through Application filed under Rule 89(4B).(Reply dt.05-06-2020)