Section 54 of GST – Refund of tax. All Details for GST Section 54 In this section you may find all details for Refund of tax as per GST Act 2017. Detailed Analysis of GST Section 54 of GST Act 2017 – Refund of tax.
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Section 54 of GST – Refund of tax
(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 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 as per 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 specialized agency of United Nations Organization or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 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
(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilized input tax credit at the end of any tax period:
Provided that no refund of unutilized 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 by the Government on the recommendations of the Council:
Provided further that no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty:
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.
(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 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 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 percent 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 sub-section (5) for final settlement of the refund claim after due verification of documents furnished by the applicant.
(7) The proper officer 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 for export 1of goods or services or both or on inputs or input services used in making such for exports2;
- (b) refund of unutilized 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 recommendation 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 the said 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 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 erstwhile 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 proceeding 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 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 sub-section (5)
or sub-section (6) shall be paid to an applicant if the amount is less than one
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 unutilized 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 the goods themselves or, as the case may be, the
inputs or input services used in such goods, –
- 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
- if the goods are exported by land, the date on which such goods
pass the frontier, or
- if the goods are exported by post, the date of dispatch of goods by Post Office concerned to a place outside India;
- if the goods are exported by sea or air, the date on which the ship
- (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 or in Indian rupees where ever permitted by the Reserve Bank of India3(, where the supply of services had been completed prior to the receipt of such payment; or
- (ii)issue of invoice, where payment for the service 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 Appellate Authority, Appellate Tribunal or any Court, the date of communication of such judgment, decree, order or direction;
- (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 arises4;
- (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.
Section 54 deals with the legal and procedural aspects of claiming refund by any person in respect of –
- any tax (which was excess paid);
- interest paid on such tax; or
- any other amount paid (which was not required to be paid);
- tax paid on zero rated supply of goods or services or both i.e. against exports and supplies to SEZ
- tax paid on inputs or input services “used” in the zero rated supply of goods and/or services including exports and supplies to SEZ;
- tax on the supply of goods regarded as deemed exports;
- unutilized input tax credit at the end of tax period in cases of:
- exports, other than when
• goods are subjected to export duty.
• the supplier avails drawback of central tax or claims refund of integrated tax paid on such supplies.
- input tax rate being higher than output tax rate, other than NIL rated or fully exempted.
8. Supply which is not provided, either wholly or partially and for which invoice has not been issued or refund voucher has been issued.
9. any other amount paid on intra-State supply which is subsequently held to be interState supply and vice versa
10. Refund to Casual Taxable Person/ Non Resident Taxable Person (subject to furnishing all returns for the period of currency of registration)
This section provides for conditions and procedures for claiming refund without specifying all the circumstances in which the refund will be eligible to an applicant. Some Other circumstances where refund may be granted but are not covered by section 54 may be as follows:
a. Refund of duty/tax under existing law
b. Refund in case of International Tourist
c. Refund of Provisionally paid tax
d. Refund of Compensation Cess
e. Refund on account of Excess or Erroneous Deduction
f. Refund on Inward Supplies to Canteen Stores Department
g. Refund to Inward Supplies to UN and agencies
h. Refund of Interest against restoration of ITC
i. Refund of Interest against restoration of reduction in output tax liability
j. Refund due to order of Appellate Authority/Court
k. Refund of Central share in CGST & IGST in hilly areas
l. Refund of tax under Seva Bhoj Yojna
Thus, it can be inferred that refund is possible only when
(a) tax, interest or any other amounts are physically paid in cash and
(b) in respect of exports / SEZ supplies/inverted duty rate in the form of input tax.
Frequently Asked Questions
Is there a time limit to file refund claim?
Generally, Yes. The refund claim has to be filed within two years from the relevant date. However, if the tax or interest thereon or amount claimed as refund is paid under protest, the time limit is not applicable.
Whether there is any provision for condonation of delay in filing refund claim beyond two years from the relevant date (where tax/interest/amount is not paid under protest)?
No. There is no provision to condone the delay and the refund claim will be rejected without getting into merits of the refund claim.
Whether there is any procedure to pay tax/interest/amount under protest?
There is no mechanism or procedure set out in the GST Act. As per the practice prevailing under the erstwhile central indirect tax laws, a letter expressing the fact that the tax/interest/amount is being paid under protest setting out the reason may be sufficient to consider that the payment is made under protest.
What would be the time limit for sanctioning refund?
The refund has to be sanctioned within 60 days from the receipt of duly completed application containing all the prescribed information/documents.
Whether refund of unutilized credit at the end of tax period can be claimed by supplier who does not have any exports.
Yes. It is available in cases where the accumulation of credit is for the reason of tax rate on inputs and input services being higher than the rate of tax on outputs other than NIL rated or fully exempted outward supply.
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