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Gujarat HC serves notices on govt, GST council for breach of refund norms

Gujarat HC serves notices on govt, GST council for breach of refund norms

The Gujarat High Court has issued notices to the union government and the GST Council over the alleged breach of refund norms by field officers under the goods and services tax (GST) regime.

Under the Rule 92 of the Central GST (CGST) Act, the claim of the refund has to be made in the RFD 04 form. Thereafter, the officer concerned can accept or reject the claim after his investigations.

If the claim is accepted, he would issue refund in the form RFD 06. In case the refund is required to be adjusted, the officer would withhold it in the form RFD 07. If the refund is not admissible, partly or wholly, this would be communicated through the form RFD 08.

If the amount is rejected, it would be credited to the government account under the Rule 93 of the

Gujarat HC serves notices on govt, GST council for breach of refund norms CGST Act, but for that, due process of RFD forms has to be followed.
A petitioner moved the high court, saying the field officer concerned rejected his claim of refunds without resorting to RFD forms. He reversed it under the Rule 93, which, he argued, could not be done without following the due process.

Abhishek Rastogi, counselor of the petitioner and partner at Khaitan & Co, said many petitioners were keen to move the court over the lapses. “The law provides that the denial of the refund has to happen only after compliance with the procedure laid down. We have challenged the rejection order, which has not followed the due process of law,” he said.

Source: Business-Standard.

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Hotels, travel aggregators start refunding GST

Hotels, travel aggregators start refunding GST

Sridhar (name changed) got a pleasant surprise on Monday morning when he got a message from an online travel aggregator regarding a booking for Varanasi hotel made in September for stay in November.

“This is an important update regarding your upcoming hotel stay at XXX Hotel. The amount of tax applicable on this hotel booking has now been reduced in keeping with the new GST (Goods & Services Tax) reduction mandated by the GST department. We have therefore initiated a refund of ₹XXXX.X which will reflect in your account in 7-12 working days. Wallet and UPI refunds will take only 1-2 days,” the message read. Sridhar’s friend Arnab too got a similar message for a hotel booking in Shimla.

There could be many Sridhars and Arnabs who are pleasantly surprised by this move as a refund has been initiated, probably for the first time, after GST rate lowered for hotel sector.

In its 37th meeting, held in Goa on September 20, the GST Council rejiged the slabs from four to three and reduced the highest tax from 28 per cent to 18 per cent. To make this effective, the Central Board of Indirect Taxes and Custom (CBIC) and States’ Tax authorities notified the new rates by September 30.

“With the increasing awareness of the need to charge only the applicable GST and refund any excess charged to the end consumer accompanied by the evolution of stable IT processes enabling such refunds, consumers can look forward to fairer business practices from B2C businesses,” said MS.Mani, Partner with Deloitte India.

Normally, many hotels and travel aggregators announce special packages for vacations and long weekends and offer special rates if booking is made in advance. Since, old rates were applicable till September 30, nyone booking by that date for stay in October onwards had to pay higher tax. Technically speaking, if rates have been lowered, then goods/service providers need to pass on the benefit, otherwise the matter could go to the Anti-profiteering Authority.

There have been such instances with goods providers, when many companies were asked to reduce the prices, return the profiteered amount along with interest at the rate of 18 per cent or deposit profiteered amount along with penalty.

Same rules apply to the services also. Now, to avoid action by National Anti-profiteering Authority (NAA), companies can suo motu initiate the process of lowering the price or refund the difference in case of advance booking.

Rajat Mohan, Senior Partner with AMRG said that taxes in the hospitality sector have been rationalised from October 1 resulting in savings of 6-10 per cent in consumers’ budget for hotel accommodation services prospectively.

“In case of advance bookings made in a pre-change tax period, higher taxes were collected by the sector including online aggregators which now needs to be returned. There are reports that some multi-national chain of hotels and some leading online aggregators have suo motu started refunding the excess collection of taxes, as retention of any amount by businesses would make them guilty under anti-profiteering provisions,” he said.

Now, if someone has not received any refund intimation for the hotel booking in India made prior September 30 for stay in October onwards, he/she should ask the hotel or aggregator to do so.

Source: The-Hindu-Business-Line.

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MSMEs want GST levied only after receiving payments

MSMEs want GST levied only after receiving payments

A majority of the 13,000-odd micro, small and medium enterprises (MSMEs) in Visakhapatnam are in dire straits as the Goods and Services Tax (GST) is being collected the moment they raise invoice whether or not they receive the amount from those who place the orders.

The MSMEs are already facing the heat of the economy slowdown and severe cost reduction measures launched by their major clients such as Visakhapatnam Steel Plant, HPCL Visakh Refinery, Hindustan Shipyard Ltd and Heavy Plate and Vessels Plant. And the collection of GST even before the payments are made is adding to their woes.

Due to poor placement of orders, the major industries have been delaying the payments to the ancillary, downstream units and the vendors. This has put the MSME entrepreneurs on a sticky wicket.

“Our predicaments have come to such a pass that sometimes the payment is delayed for several months. But GST is collected at 18% from us and import credit is refunded late. If we fail to pay GST after raising the invoice, we have to pay the penalty for every single day,” AP Chambers of Commerce and Industry Federation Director O. Naresh Kumar told The Hindu.

The MSME entrepreneurs want waiver of the pre-closure for bank loans. At present, the banks are charging 4% penalty for pre-closure of industrial and vehicle loans. For income tax, 6% interest is paid if refund is delayed. “When we pay late, 12% to 18% penalty is levied on us,” Mr. Naresh Kumar pointed out.

Those units which find it difficult to pay the EMIs and mobilise funds by selling their property are being charged with capital gain tax. “Let the capital gain be considered taking into consideration the loan liability which one wants to clear from the proceeds received from the sale of property,” he said.

MSME entrepreneurs poured out their woes before Union Minister of State for MSME, Dairy, Animal Husbandry and Fisheries Pratap Chandra Sarangi during his brief visit to the city recently. Mr. Sarangi told The Hindu that he would look into their problems and try to ensure justice as the MSME sector was a major revenue-churner and job-provider.

Source: The-Hindu

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CBIC issues Clarifications to allow Re-Filing of Refund Claim where NIL Refund Claim was filed inadvertently under GST

CBIC issues Clarifications to allow Re-Filing of Refund Claim where NIL Refund Claim was filed inadvertently under GST

The Central Board of Indirect Taxes ( CBIC ) has issued Clarifications to allow Re-Filing of Refund Claim where NIL Refund Claim was filed inadvertently under Goods and Services Tax ( GST ).

In a Circular issued by CBIC said that, “Whenever a registered person proceeds to claim a refund in FORM GST RFD-01A/RFD-01 under a category for a particular period on the common portal, the system pops up a message box asking whether he wants to apply for ‘NIL’ refund for the selected period. This is to ensure that all refund applications under a particular category are filed chronologically. However, certain registered persons may have inadvertently opted for filing of ‘NIL’ refund. Once a ‘NIL’ refund claim has been filed for a period under a particular category, the common portal does not allow the registered person to re-file the refund claim for that period under the said category”.

The CBIC also clarified that a registered person who has filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a given period under a particular category, may again apply for refund for the said period under the same category only if he satisfies the following two conditions:

  • The registered person must have filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a certain period under a particular category; and
  • No refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.
    It may be noted that condition (b) shall apply only for refund claims falling under the following categories:

1.Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;

2.Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;

  • Refund of unutilized ITC on account of accumulation due to inverted tax structure;

In all other cases, registered persons shall be allowed to re-apply even if the condition (b) is not satisfied

While concluding the Circular, the CBIC also said that, “Registered persons satisfying the above conditions may file the refund claim under “Any Other” category instead of the category under which the NIL refund claim has already been filed. However, the refund claim should pertain to the same period for which the NIL application was filed. The application under the “Any Other” category shall also be accompanied by all the supporting documents which would be required to be otherwise submitted with the refund claim”.

“On receipt of the claim, the proper officer shall calculate the admissible refund amount as per the applicable rules and in the manner detailed in para 3 of Circular, No.59/33/2018-GST dated 04.09.2018, wherever applicable. Further, upon scrutiny of the application for completeness and eligibility, if the proper officer is satisfied that the whole or any part of the amount claimed is payable as the refund, he shall request the taxpayer in writing, if required, to debit the said amount from his electronic credit ledger through FORM GST DRC-03. Once the proof of such debit is received by the proper officer, he shall proceed to issue the refund order in FORM GST RFD-06 and the payment order in FORM GST RFD-05”, the department also added.

Click Here for Circular

Source: TaxScan.

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GST Network starts online refund processing

GST Network starts online refund processing

GST Network, the IT backbone of the indirect tax system, on Thursday unveiled an online refund process as decided by the GST Council.

With the deployment of online refund functionality, taxpayers can now file refund application (in RFD 01 form) easily and tax officers can process the same online, GST Network said in a statement.

All communications between taxpayers and tax officers will also be online. The online refund process has become effective from September 25, 2019, on the GST portal, it said.

Earlier, the refund processing was done for both Central and State GST by one tax authority to whom the taxpayer was assigned administratively but disbursement was done by accounting authorities of central and state tax departments separately.

This was leading to a delay on account of sharing of sanction order with counterparty accounting authority through that tax authority, it said.

The new system has done away with this and after processing is completed by the tax officer, the sanctioned amount will get credited to the bank account of the Taxpayer through PFMS System, it said.

GST Network CEO Prakash Kumar said the new refund process will create a seamless experience for both taxpayers and tax officers.

“This will boost the disbursement speed of refunds and further improve the GST compliance. Taxpayers can view the various stages of processing of their refund application on the GST Portal and can give replies to notice, if any, online on the GST Portal now,” he said.

They will also be given information via SMS and Email, at important stages of processing of their refund application, he said, adding most importantly, the payment of amount will now be done from one disbursement authority i.e. PFMS unlike the earlier method where sanction was done by one authority but payment was made by State and Central Authorities separately.

Meanwhile, all refund applications filed before September 26, 2019 will be processed manually as done under the old refund process.

Source: Live-Mint.

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All pending GST refunds for MSMEs to be paid within 30 days: FM 

All pending GST refunds for MSMEs to be paid within 30 days: FM 

To ease GST related woes for the MSME sector the Finance Minister Nirmala Sitharaman has announced that all pending GST refunds will be paid within 30 days. Further, all future GST refunds will be sorted out in 60 days, she said.

This will ease the working capital burden on MSMEs, the FM hoped. “This is clearly time bound now. Everything that is pending since the time of introduction of GST till today and have a refund pending will be sorted out in 30 days. The government has worked to clear it in the next 30 days.

For every future GST refunds, every matter will be sorted out in 60 days, she added. “MSMEs do not have to be worried about money being stuck,” said Sitharaman.

According to M S Mani, Partner, Deloitte India, “Expediting GST refunds would significantly benefit businesses having refunds in improving their working capital in the short term.”

Assuring taxpayers that GST will come up with even lesser number of forms, the FM said refunds should go through as a process and she would be meeting with GSTN on Sunday to check the refund process. “Having fewer GST forms would encourage enhanced compliance by existing taxpayers and also address compliance concerns of those planning to obtain registration thereby enhancing the overall taxpayer base,” said Mani.

In another decision, the FM announced that use of GSTN is to be used for all bill discounting on TReDS. The decision is supposed to streamline the procedures for MSMEs.

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Source: Economic-Times
Pay up interest for delay in paying GST refunds: Gujarat High Court

Pay up interest for delay in paying GST refunds: Gujarat High Court

The Gujarat High Court has directed the authorities to pay interest for delay in paying GST refunds.

The authorities were asked to pay the interest at the rate of nine per cent per annum.Saraf Natural Stone, a partnership firm, had filed a claim of GST refund. However, there was substantial delay by the authorities in granting of refund.

Following this, the firm approached the high court by way of writ and demanded interest from the authorities for the delay. It submitted that the authorities are required to grant a provisional refund of 90 per cent of the amount claimed within seven days of filing of the claim.

The firm said the authorities have not provided any reason for the delay and it was never in receipt of any deficiency notice, which could have transpired such a delay.

It further submitted that the delay has impacted its working capital and hence it is entitled to receive interest on such delayed payment.

However, the authorities — the revenue department, the Central Board of Indirect Taxes and Customs (CBIC) and the GST Network — submitted that there was no express provision made for entitlement of interest to the firm and hence there was no merit in this petition.

The high court held that the position of law is quite well settled wherein the provisions relating to interest on delayed payment of refund have been consistently held as beneficial and non-discriminatory.

Hence, it said the authorities are liable to pay simple interest on the delayed payment at the rate of nine per cent per annum.

Harpreet Singh, partner at KPMG, said, “This is an important development as often pending refund claims adversely impact working capital of exporters.”

He said the ruling should open doors for claimants who can now rightfully demand interest from authorities where there has been a substantial delay for no fault of the assessee.

Source : Business-Standard

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GST refund to be blocked if ‘80% local employees’ rule breached: Maharashtra govt

GST refund to be blocked if ‘80% local employees’ rule breached: Maharashtra govt

The Maharashtra government would soon issue an order whereby GST refunds would be blocked if an industrial unit fails to submit proof that 80 per cent of its employees are ‘sons of the soil’ as required by rules, it said Thursday.

Industries Minister Subhash Desai said a new Government Resolution (GR) would be brought in for this purpose. It would also apply to recruitment of contract employees, he said. If needed, Maharashtra may contemplate bringing a law, on the lines of Andhra Pradesh, to ensure that local people get certain proportion of jobs in industries, he said.

Maharashtra was the first state to frame a rule in 1968 that all industrial establishments should hire at least 80 per cent local people, Desai, a Shiv Sena leader, said.

“The first GR was issued on November 18, 1968, and since then the GR has been revised (re-issued) five times till 2008,” he told reporters.

Late Shiv Sena founder Bal Thackeray had led several agitations demanding priority for local people in jobs, and the GR in 1968 was its result, he said.

The government gives refund on Goods and Services Tax to industrial establishments based on their capital investment. In 2018-19, the total refund amounted to Rs 3,035 crore, Desai said.

“If the refund is blocked, it will be a huge loss for industrial units and they will not dare violate the rule to hire 80 per cent locals,” he said.

The refund would be released only after the industrial unit submits proof that it has complied with the rule.

As per government records, overall 90 per cent of employees in industrial sector are locals, while 84 per cent of those occupying supervisor/managerial grade posts are Maharashtrians. PTI MR KRK.

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Source: Money-Control.
18% GST likely on back-end IT services as they don’t qualify as export

18% GST likely on back-end IT services as they don’t qualify as export

Most facilitation services the IT and ITeS sector offers at the back end, especially with respect to business process outsourcing, may attract an 18 per cent goods and services tax (GST) because the government has said those will not qualify as export.

Clearing the confusion related to exports of IT and ITeS services, the government said the services facilitating the supply of goods or services would not qualify as export and would be recognised as intermediaries, attracting an 18 per cent GST.

The move will have consequences for service providers in back-end services and post-sales support, among others.

Acting as facilitators between overseas parent companies and Indian customers by doing general marketing, answering basic enquiries, or providing post-sales support was, thus far, generally not being intermediaries, said Harpreet Singh, partner in KPMG.

“Unless the scope was substantive and involved concluding contracts, negotiating price, etc., tax was not paid, treating such services as export. This position needs to be re-visited now,” he said.

However, if service is given on one’s own account, it will be considered export.

Export is considered a zero-rated supply under the GST and a refund can be claimed.

The circular, issued by the Central Board of Indirect Taxes and Customs (CBIC), is aimed at putting to rest litigation and disputes related to export-related refunds.

However, experts have other views.

Atul Gupta, senior director, Deloitte India, said the CBIC circular mystified the issues and left open scope for litigation.

“It is going to be a detriment for the export of services because exporters no longer can claim input tax refunds on them,” he said.

Gupta said the circular was faulty and needed another look before it resulted in demand notices from GST field formations on outsourcing services.

Bipin Sapra, partner, EY, said certain grey areas continued but this would bring relief to a large section of IT and ITES exporters facing frivolous demands and denial of export benefits.

“The clarification will help in settling most objections regarding exports of services and the exporters will get refunds.”

The issue is important because strong representations were made by industry bodies such as Nasscom and Amcham for clarity on the subject.

Nasscom said it was studying the impact of the latest development.

The government has examined three broad scenarios, wherein a supplier of ITeS located in India supplies services for and on behalf of a client abroad, to clarify its treatment under the GST.

The Maharashtra Authority of Advance Ruling (AAR) had upheld back-office operations do not qualify as export.

Abhishek Jain, tax partner, EY, said though the circular addressed customary back-office operations, matters that involved back-end and facilitation remained a matter of concern.

In situations where a back end services provider uses his own account as well as arranges or facilitates supplying support services related to pre- or post-delivery on behalf of overseas clients, taxability will be ascertained case by case.

Source: Business-Standard

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Two traders arrested for Rs 50 crore IGST refund fraud 

Two traders arrested for Rs 50 crore IGST refund fraud 

The Belapur Central GST Commissionerate arrested two traders for allegedly floating over 50 shell companies to fraudulently to avail IGST refunds after GST council recently issued guidelines to curb refund related frauds, people in the know told ET.

Sources said Ajay Gopinath Mishra and Ramesh Chandra Bhatt availed IGST refund by showing export of textile goods over Rs 350 crore and collected IGST refund of over Rs 50 crore between January and May. The said amount was refunded by the customs to these exporters at the port of export.

“The IGST was paid using input tax credit (ITC) which has been found to be fraudulent,” said one of the officials.

An official explained that non-existent suppliers issued invoices for passing of the ITC utilised for payment of IGST on exported goods and IGST refund is claimed. These companies were created by using the PAN and Aadhar Cards of various un-suspecting persons through whom GST refunds were being claimed.

“In this case too, the Belapur Commissionerate officials unearthed a syndicate of more than 50 companies such as H.A. Creation, A.S. Fashion, Ritiesh Creations, R.D. Creation, Bamane Enterprises were floated to fraudulently avail benefits of IGST refunds,” revealed the official. “No one has actually paid the IGST on which ITC was availed by the exporter.”

During investigation, a source said, the bank accounts declared to the department at the time of obtaining GST registration certificate were allegedly different from the bank account declared to the Customs authorities for the purpose of IGST refund. The probe also revealed that while most of the suppliers and CHAs are located at Delhi, the premises of dummy exporters are registered in Mumbai.

Furthermore, documents such as purchase documents, export documents, cheque books, signed blank cheques, ATM debit cards and PIN of about 50 proprietorship firms were recovered from the office premises of the mastermind.

“Both the persons in their statement have admitted that they were the custodian of the bank documents of all the proprietorship firms,” the official further added.

“The investigations has revealed that fictitious suppliers issued invoices for passing of the ITC which was utilized for payment of IGST on exported goods and claiming IGST refund of the same. This fact was further corroborated by the findings that none of the suppliers down the line have generated mandatory E-way Bills for the purported supplies made to the exporters. Thus entire ITC availed by the exporters was found fraudulent,” said Shrawan Kumar, Commissioner, CGST.

Earlier in June the Central Board of Indirect Taxes and Customs (CBIC) asked director-general (systems) to identify a list of “risky exporters” and share it with customs and GST officers. Thereafter CBIC issued a circular dated June 17, 2019 providing a time bound mechanism to verify the IGST payments for goods exported out before sanctioning IGST refund in suspicious and risky cases.

“The new mechanism would ensure that such frauds are curbed while facilitating genuine exporters,” added Kumar.

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Source: Economic-Times.
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