Clarification on GST Refund Related Issues

The Central Board of Indirect Taxes & Customs (CBIC) through a circular dated 17th November 2021 has issued a clarification on GST refund-related issues. The CBDT has received various representations from taxpayers and other stakeholders seeking clarification in respect of certain issues relating to refund. With this circular, the CBIC has issued a clarification with respect to several issues related to refund of excess balance in cash ledger such as time limit for filing application, refund of TDS/TCS balance in cash ledger, the requirement of the certificate, etc.

Synopsis of CBIC Circular

CBIC clarified that the time limit of filing refund applications prescribed in sub-section (1) of section 54 of the CGST Act would not be applicable in cases of refund of excess balance in electronic cash ledger.
Certification/declaration for not passing the incidence of tax to any other person is not required in cases of refund of excess balance in electronic cash ledger.
The refund of TDS/TCS deposited in an electronic cash ledger that remains unutilized can be claimed as an excess balance in the cash ledger.

CBIC Clarification on Time Limit for Filing Refund Application

As mentioned above, CBIC clarified that the time limit of filing refund applications prescribed in sub-section (1) of section 54 of the Goods and Services Tax (GST) Act would not be applicable in cases of refund of excess balance in electronic cash ledger.

Section 54(1) of the CGST Act

Any person claiming refund of any tax and interest, if any, paid on such tax or any other amount paid by him, may make an application before the expiry of two years from the relevant date in such form and manner as may be prescribed: Provided that a registered person, claiming refund of any balance in the electronic cash ledger in accordance with the provisions of sub-section (6) of section 49, may claim such refund in the return furnished under section 39 in such manner as may be prescribed. Section 54(1) of the CGST Act states that any person who has paid any tax and interest, if any, paid on such tax or any other amount can apply for the claim of such tax, interest (if any), or another amount so paid.

Application for refund shall be made before the expiry of two years from the relevant date. The time limit of two years does not apply to the claim application filed for the reason of excess balance in the electronic cash ledger.
In the case of the taxable person claiming a refund of any balance in the electronic cash ledger, it can be claimed in the return furnished under section 39.

CBIC Clarification on Requirement of Certificate

With this circular, CBIC Clarified that certification/ declaration under Rule 89(2)(l) or 89(2)(m) of CGST Rules, 2017 is not required to be furnished along with the application for refund of excess balance in electronic cash ledger.

CBIC Clarification on Refund of TDS/TCS deposited in electronic cash ledger

Refund of TDS/TCS deposited in the electronic cash ledger under the provisions of section 51 /52 of the CGST Act can be refunded as excess balance in the cash ledge.CBIC issued the following clarification. It is not mandatory for the registered person to utilize the TDS/TCS amount credited to his electronic cash ledger only for the purpose of discharging tax liability. The registered person is at full liberty to discharge his tax liability in respect of the supplies made by him during a tax period, either through debit in electronic credit ledger or through debiting electronic cash ledger, as per his choice and availability of balance in the said ledgers. Thus, the registered person is at full liberty to claim a refund of TDS/TCS lying in an electronic cash ledger.

CBIC Clarification on the relevant date for the refund of tax paid on supplies

Clause (b) of Explanation (2) under section 54 of the CGST Act is applicable for determining relevant date in respect of a refund of the amount of tax paid on the supply of goods regarded as deemed exports, irrespective of the fact whether the refund claim is filed by the supplier or by the recipient. Further, as the tax on the supply of goods, regarded as deemed export, would be paid by the supplier in his return, therefore, the relevant date for purpose of filing of refund claim for refund of tax paid on such supplies would be the date of filing of the return, related to such supplies, by the supplier.