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Recently many exporters are claiming that they have received GST notices to recover the GST refunds they claimed from July 2017 to September 2018. The authorities issued notices to exporters for wrongfully availing GST refunds. Many of these GST notices claim that the wrongful GST refunds amount to crores of Indian rupees.
The Central Board of Indirect Taxes and Customs (CBIC) issued the CGST Notification number 54/2018 on 9th October 2018. As per the notification, exporters could claim a refund of GST paid on exports subject to conditions. One of the conditions was that such exporters must not have imported by taking benefits under the Advance Authorisation (AA) scheme. This restriction was because they are exempted from IGST payment on imports. The amendment would apply prospectively from October 2018.
It meant that the restriction would not apply for cases of manufacturing of goods for exports before October 2018 or, in other words, from July 2017 up to September 2018. The exporters received notices for this period, which led to many points of contention between the sector and the tax authorities.
Amidst the changing rules and frequent amendments of the CGST Rule 96(10), huge confusion sprung up among exporters. Moreover, the tax officers started conducting enquiries covering July 2017- September 2018 to recover the GST refunds sanctioned where the Advance Authorisation scheme was availed.
The CBIC’s notification clearly states that it will be effective from the date it gets published in the Official Gazette. It means that the amendment never applied retrospectively. The same matter was clarified through the GST circular issued in 2018. Moreover, the Gujarat High Court resonated with the same notion that the amendment applies prospectively.
Accordingly, the exporters claim that the tax authorities are creating undue hardship to pay back the GST refund they rightfully have received. They have requested the Finance Ministry and the CBIC to take action on tax officers causing these hardships and to put an end to their misery.
For any clarifications/feedback on the topic, please contact the writer at annapoorna.m@cleartax.in
Annapoorna, popularly known as Anna, is an aspiring Chartered Accountant with a flair for GST. She spends most of her day Singing hymns to the tune of jee-es-tee! Well, not most of her day, just now and then.
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