Refund must be sanctioned within 60 days of filing of application, otherwise interest on delayed payment of refund will be paid.
Where a refund order is:
(a) subject matter of an appeal or
(b) further proceedings or any other proceedings under this Act is pending and
(c) the Commissioner is of the opinion that grant of such refund is likely to adversely affect the revenue in the said appeal or
(d) other proceedings on account of malfeasance or fraud committed by the applicant.
He may, after giving the taxable person an opportunity of being heard, withhold the refund till such time as he may determine by passing an order in Part B of Form GST RFD-07.
However, if the applicant becomes entitled to the refund as a result of the appeal or the proceedings, the interest on the amount refundable would be payable along with refund from the relevant date.
Where refund of ITC is sanctioned and paid, the ITC ledger is debited in an amount equal to the refund so claimed and sanctioned.
In case refund is claimed for ITC of Zero-rated supply of goods or services for export without payment of tax, the refund of ITC shall be granted as per following formula:
Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero rated supply of services) X (Net ITC) / (Adjusted Total Turnover)
Here:
a. Refund Amount means - The maximum refund that is admissible
b. Net ITC means - ITC available on Input and Input Services during the relevant period
c. Turnover of zero-rated supply of goods means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking;
d. Turnover of zero-rated supply of services means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:— Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and
Zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period;
e. Adjusted Total turnover means the turnover in a State or a Union territory, as defined under sub-section (112) of section 2, excluding the value of exempt supplies other than zero-rated supplies, during the relevant period;
Sec. 2(112) specify that “Turnover in State or Turnover in Union Territory means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-state supplies of goods or services or both made from the State or UT by the said taxable person but excludes Central Tax, State tax, UT tax, IGST and Cess.”
f. Relevant period means the period for which the claim has been filed. We may understand this formula through an example. Suppose Turnover of zero-rated supply of goods and services are Rs. 1,00,000 each. Net ITC is 30,000 and adjusted total turnover is 3,00,000. Accordingly —
Refund Amount = (1,00,000 + 1,00,000) X 30,000/(3,00,000)
= 2,00,000 X 30,000/3,00,000
= 6000000000/300000
= 20,000
It means the Refund Amount of ITC would be 20,000
Further, where refund is granted an account of inverted duty structure.
The refund of ITC shall be granted as per following Formula Maximum Refund Amount {(Turnover of inverted rated supply of goods) >< Net ITC ÷ Adjusted Total Turnover} — Tax payable on such Inverted rated supply of goods. |
