Section 54 CGST Act 2017 – Refund of tax.

By | April 17, 2017
(Last Updated On: December 30, 2018)

Section 54 CGST Act 2017

Summary of Section 54 CGST Act 2017

Section 54 CGST Act 2017 Notified w.e.f 01.07.2017 vide Notification No. 9/2017 – Central Tax Dated 28th June, 2017

Section 54 CGST Act 2017 explains Refund of tax  and is covered in Chapter XI – Refunds 

[Note : CGST Act 2017 also known as CENTRAL GOODS AND SERVICES TAX ACT, 2017 assented by the President of India on 12-4-2017 -An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. ]

Section 54 CGST Act 2017 : Refund of tax.

54. (1) 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.

(2) A specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received. [Note 13 ]

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period [Note -14]:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than—

(i) zero-rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified [ Note -1 , 2 , 3 , 4 , 6 , 7  , 8 , 10,15] by the Government on the recommendations of the Council:

Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty: [Note declaration in FORM GST RFD-01 and declaration in FORM GST RFD-01A]

Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies. [ Note 12 ]

(4) The application shall be accompanied by—

(a) such documentary evidence as may be prescribed to establish that a refund is due to the applicant; and

(b) such documentary or other evidence (including the documents referred to in section 33) as the applicant may furnish to establish that the amount of tax and interest, if any, paid on such tax or any other amount paid in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such tax and interest had not been passed on to any other person:

Provided that where the amount claimed as refund is less than two lakh rupees, it shall not be necessary for the applicant to furnish any documentary and other evidences but he may file a declaration, based on the documentary or other evidences available with him, certifying that the incidence of such tax and interest had not been passed on to any other person.

(5) If, on receipt of any such application, the proper officer [ Note-9] is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57.

(6) Notwithstanding anything contained in sub-section (5), the proper officer [ Note-9] may, in the case of any claim for refund on account of zero-rated supply of goods or services or both made by registered persons, other than such category of registered persons as may be notified by the Government on the recommendations of the Council, refund on a provisional basis, ninety per cent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted, in such manner and subject to such conditions, limitations and safeguards as may be prescribed and thereafter make an order under subsection (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.

(7) The proper officer [ Note-9] shall issue the order under sub-section (5) within sixty days from the date of receipt of application complete in all respects.

(8) Notwithstanding anything contained in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to—

(a) refund of tax paid on 16[export] of goods or services or both or on inputs or input services used in making such 16[export];

(b) refund of unutilised input tax credit under sub-section (3);

(c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued;

(d) refund of tax in pursuance of section 77;

(e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or

(f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify.

(9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in accordance with the provisions of sub-section (8).

(10) Where any refund is due under sub-section (3) to a registered person who has defaulted in furnishing any return or who is required to pay any tax, interest or penalty, which has not been stayed by any court, Tribunal or Appellate Authority by the specified date, the proper officer [ Note-9]  may—

(a) withhold payment of refund due until the said person has furnished the return or paid the tax, interest or penalty, as the case may be;

(b) deduct from the refund due, any tax, interest, penalty, fee or any other amount which the taxable person is liable to pay but which remains unpaid under this Act or under the existing law.

Explanation.—For the purposes of this sub-section, the expression “specified date” shall mean the last date for filing an appeal under this Act.

(11) Where an order giving rise to a refund is the subject matter of an appeal or further proceedings or where any other proceedings under this Act is pending and the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or other proceedings on account of malfeasance or fraud committed, he may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine.

(12) Where a refund is withheld under sub-section (11), the taxable person shall, notwithstanding anything contained in section 56, be entitled to interest at such rate not exceeding six per cent as may be notified [ Note -5,5A] on the recommendations of the Council, if as a result of the appeal or further proceedings he becomes entitled to refund.

(13) Notwithstanding anything to the contrary contained in this section, the amount of advance tax deposited by a casual taxable person or a non-resident taxable person under sub-section (2) of section 27, shall not be refunded unless such person has, in respect of the entire period for which the certificate of registration granted to him had remained in force, furnished all the returns required under section 39.

(14) Notwithstanding anything contained in this section, no refund under subsection (5) or sub-section (6) shall be paid to an applicant, if the amount is less than one thousand rupees.

Explanation.—For the purposes of this section,—

(1) “refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3).

(2) “relevant date” means—

(a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods,—

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or

(ii) if the goods are exported by land, the date on which such goods pass the frontier; or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished;

(c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of—

(i) receipt of payment in convertible foreign exchange 17[or in Indian rupees wherever permitted by the Reserve Bank of India, where the supply of services had been completed prior to the receipt of such payment; or

(ii) issue of invoice, where payment for the services had been received in advance prior to the date of issue of the invoice;

(d) in case where the tax becomes refundable as a consequence of judgment, decree, order or direction of the Appellate Authority, Appellate Tribunal or any court, the date of communication of such judgment, decree, order or direction;

18 [ (e)in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises;]

(f) in the case where tax is paid provisionally under this Act or the rules made thereunder, the date of adjustment of tax after the final assessment thereof;

(g) in the case of a person, other than the supplier, the date of receipt of goods or services or both by such person; and

(h) in any other case, the date of payment of tax.


Notes on Section 54 CGST Act 2017

18.  Substituted by the Central Goods and Services Tax (Amendment) Act, 2018, with effect from a date yet to be notified. Prior to its substitution, clause (e) read as under :

“(e)in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises;”

17. Inserted by the Central Goods and Services Tax (Amendment) Act, 2018, with effect from a date yet to be notified.

16.  Substituted for “zero-rated supplies” by the Central Goods and Services Tax (Amendment) Act, 2018, with effect from a date yet to be notified.

15 Notification No 20/2018 Central Tax (Rate) Dated 26th July, 2018 Seeks to amend Notification No 05/2017-Central Tax (Rate),dt. 28-06-2017 to give effect to the recommendations of the GST Council in it’s 28th meeting held on 21.07.2018

14 Circular No 48/22/2018 GST issued on 14.06.2018 : Fabric processors shall be eligible for refund of unutilized ITC on account of inverted duty structure under section 54(3) of the CGST Act even if the goods (fabrics) supplied to them are covered under notification No. 5/2017-Central Tax (Rate) dated 28.06.2017.

13 Extension of due date for filing of application for refund under section 55 by notified agencies  vide Notification No 20/2018 Central Tax Dated  28th March, 2018

12. Clarifications on exports related refund issues Circular No 37/11/2018 GST  Dated the 15th March, 2018

11  Manual filing and processing of refund claims on account of inverted duty structure, deemed exports and excess balance in electronic cash ledger vide Circular No 24/24/2017 GST dated the 21st December, 2017 ]

1. Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed notified under section 54 (3) of CGST Act 2017 vide Notification No.5/2017-Central Tax (Rate) Dated  28th June, 2017

2. Supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under IGST Act 2017 : Notification No.5/2017-Integrated Tax (Rate) Dated 28th June, 2017

3. Specifying supplies of goods in respect of which no refund of unutilised input tax credit shall be allowed under section 54 (3) of CGST Act 2017 vide Notification No. 5/2017-Union Territory Tax (Rate) Dated the 28th June, 2017

4. To notify the supplies not eligible for refund of unutilised ITC under UTGST Act vide Notification No. 15/2017-Union Territory Tax (Rate) Dated the 28th June, 2017

5A seeks to prescribe 6% rate of interest under sub-section (12) of section 54 by Notification No. 6/2017 – Integrated Tax Dated 28th June, 2017 

5. 6% Rate of Interest under sub-section (12) of section 54 prescribed by Notification No. 13/2017 – Central Tax Dated 28th June, 2017

6. The supplies not eligible for refund of unutilized ITC under CGST Act vide Notification No. 15/2017-Central Tax (Rate) Dated 28th June, 2017

7 To notify the supplies not eligible for refund of unutilized ITC under IGST Act vide Notification No. 12/2017-Integrated Tax (Rate) Dated 28th June, 2017

8. Seeks to amend notification no. 5/2017- integrated tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction of refund on corduroy fabrics vide Notification No 29/2017-Union Territory Tax (Rate)  Dated 22nd September, 2017

9. Seeks to cross-empower State Tax officers for processing and grant of refund vide Notification No 39/2017 Central Tax dated 13th October, 2017

10 seeks to amend notification no. 5/2017- Central tax(rate) dated 28.06.2017 to give effect to gst council decisions regarding restriction of ITC on certain fabrics vide Notification No 44/2017 Central Tax (Rate) Dated 14th November, 2017

 

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