QUESTION
Exporter had applied for refund of ITC for Feb
`18 by debiting I-C-S GST heads proportionately. In the refund order, the
Assistant Commissioner. disagreed with manner of debit of electronic credit
ledger in respective head vis-a-vis I-C-S GST by citing para 3 of circular
59/33/2018-GST dt. 04.09.18 and has granted refund only as per the circular and
has re-credited the wrongfully debited heads. Now, how to claim the refund of
ITC re-credited? Also, in a consolidated manner, there is minor excess refund
claim but rejection is only due to priority set as per circular.
Answer
Facts of the case: Exporter had applied for refund of ITC for Feb 18
by debiting I-C-S GST heads proportionately. The Asst. Comm. disagreed with
manner of debit of electronic credit ledger in respective head vis-a-vis I-C-S
GST by citing para 3 of cir. 59/33/2018-GST dtd 04.09.18 and has granted refund
only as per the cir and has re-credited the wrongfully debited heads. Now, how
to claim the refund of ITC re-credited?
Law applicable: Circular No. 59/33/2018-GST
3. System validations in calculating refund amount
3.1. Currently, in case of refund of unutilized input tax credit (ITC for
short), the common portal calculates the refundable amount as the least of the
following amounts:
a) The maximum refund amount as per the formula in rule 89(4) or rule 89(5) of
the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the 'CGST
Rules') [formula is applied on the consolidated amount of ITC, i.e. Central tax
+ State tax/Union Territory tax +Integrated tax + Cess (wherever applicable)];
b) The balance in the electronic credit ledger of the claimant at the end of the
tax period for which the refund claim is being filed after the return for the
said period has been filed; and
c) The balance in the electronic credit ledger of the claimant at the time of
filing the refund application.
3.2. After calculating the least of the three amounts, as detailed above, the
equivalent amount is to be debited from the electronic credit ledger of the
claimant in the following order:
a) Integrated tax, to the extent of balance available;
b) Central tax and State tax/Union Territory tax, equally to the extent of
balance available and in the event of a shortfall in the balance available in a
particular electronic
credit ledger (say, Central tax), the differential amount is to be debited from
the other electronic credit ledger (i.e., State tax/Union Territory tax, in this
case).
Interpretation: Circular No. 59/33/2018-GST dtd 04.09.18 has provided the
calculation of refundable amount. Assistant Commissioner has granted refund as
per the Formula provided in the Circular and has recredited the excess amount in
ECL.
In your case if the recredited amount can be used for payment of tax then no
problem, it is a matter of time you will convert it in cash by making payment
against outward supply.
However Circular cannot override Law, so if you are not convinced with the
Circular then you should file an appeal with Commissioner Appeal against the
order of Assistant Commissioner with prayer to refund the amount in cash instead
of recredit of it.
Conclusion: You can use the recredited amount for payment of tax on
outward supply or file an appeal with Commissioner Appeal against the order of
Assistant Commissioner with prayer to refund the amount in cash instead of
recredit of it.(Reply dt.22-07-2020)