The fortnightly refund drives, organised by the indirect tax department, have largely been successful in sanctioning regular refunds, but the initiative hasn't been able to address some specific issues, which have been pending since the rollout of the GST.
The fortnightly refund drives, organised by the indirect tax department, have largely been successful in sanctioning regular refunds, but the initiative hasn’t been able to address some specific issues, which have been pending since the rollout of the GST.
For instance, if an exporter by mistake provided a lower value of eligible refund in the shipping bill submitted to the customs department, though the correct quantum was mentioned in the summary return GSTR-3B, he receives the lower of the two refund claims. The taxman tells such an exporter that the department had no legal or procedural system to rectify the mistake and refund the full amount.
“We have approached GST Network and the customs department to rectify the error, but so far no recourse has been proposed since last year. Instead, both the agencies are claiming that the other is authorised to provide a solution,” one assessee said.
“GST refunds have been a painful experience for exporters leading to stifled working capital requirement. Organising refund fortnights has been a step in the right direction by the government, but it has not been efficient enough in resolving sticky issues, which are pending since July 2017. Tax authorities should carry out GST refund ageing analysis to determine real success of organising refund fortnights,” Rajat Mohan, partner, AMRG & Associates, said.
In another instance, a taxpayer, who had been deducting and depositing tax for government contracts, applied for refunds after the Authority of Advanced Ruling (AAR) passed an order saying that the assessee’s supply were GST exempt. However, the department has so far not been able to provide any relief as there is no set precedent for such a case and is also not explicitly covered under the GST law.
“While refund drives have been very beneficial, it is essential to put in place a mechanism to rectify errors made by businesses during the initial period of the GST. It is necessary to consider the substance and grant refunds even if there are some inconsistencies in the form or if compliance have been inadvertently missed out. This could be done as a one-time gesture to businesses who have had to grapple with various GST challenges,” MS Mani, partner, Deloitte India, said.
The CBIC has held fortnightly drives twice since March while a third one is currently underway. During the first drive, the department cleared integrated GST refunds and input tax credit (ITC) refunds of Rs 4,265 crore and Rs 1,136 crore, respectively.
During the second fortnight, Rs 6,087 crore of IGST refunds and Rs 1,548 crore ITC refunds were sanctioned. “In case of IGST refunds for goods exported out of India, the percentage of amount of refund claims disposed by CBIC is already more than 90%,” the department said on Monday.