Understanding GST Refund Orders: Forms and Processing

After a provisional Goods and Services Tax (GST) refund (RFD-04) has been issued, a GST Officer must thoroughly investigate and examine the refund claim. Following this investigation, the officer will issue one of the specific orders detailed below.Latest Updates:July 5, 2022: Taxpayers are now permitted to exclude the COVID-19 pandemic period (March 1, 2020, to February 28, 2022) when calculating the time limit for filing GST refund applications under Sections 54 or 55 of the CGST Act.February 1, 2022 (Budget 2022):Section 54 has been modified to allow refund claims for any electronic cash ledger balance to be made in a specific prescribed format.The time frame for UN agencies to claim refunds has been extended from six months to two years from the last day of the quarter in which the supply was received.Restrictions on refunding taxpayers due to tax defaults, previously applicable only to unutilized ITC refunds, now apply to other refund types as well.A new sub-clause (ba) of clause (2) clarifies the relevant date for filing refund applications for supplies to Special Economic Zones (SEZs).May 1, 2021: The deadline for passing orders to fully or partially reject refund claims, if it falls between April 15, 2021, and May 30, 2021, has been extended. The new deadline will be the later of two dates: 15 days after responding to a notice, or May 31, 2021.

GST Refund Order (RFD-06)

GST officers are required to process refund applications within 60 days of submission. If the refund amount is approved, an order will be issued electronically in Form RFD-06. This sanction order provides several key details:

• Claimed Refund Amount: The total amount of refund initially requested by the applicant.
• Provisionally Sanctioned Refund: The amount of refund granted on a provisional basis via Form RFD-04.
• Inadmissible Refund Amount: Any portion of the refund that is legally not allowed, along with the reasons for its rejection.
• Gross Payable Amount: This figure is calculated by subtracting the provisional refund and the inadmissible refund from the total claimed refund.
• Adjusted Against Outstanding Demand: If the taxpayer has any outstanding dues to the GST authorities, this amount is deducted from the gross refund payable.
• Net Payable Amount: The final refund balance remaining after any outstanding demands have been settled is disbursed to the taxpayer.

The refund process concludes with the issuance of Form RFD-05, which is the payment advice.

Complete Adjustment or Withholding of Refund (RFD-07)

Form RFD-07 is issued by a GST officer when a claimed refund is either entirely offset against outstanding demands (Part A) or withheld for specific reasons (Part B). This order details the complete adjustment or withholding of the refund.

Order for Complete Adjustment of Sanctioned Refund (Part A)

This section outlines the following:

• Claimed Refund Amount: The total refund initially requested in the application.
• Net Provisionally Sanctioned Refund: The provisional refund amount, typically 90% of the claimed refund.
• Rejected Inadmissible Refund: The portion of the refund that was not permitted and rejected, along with the grounds for rejection.
• Admissible Refund: The difference between the claimed refund, the provisional refund, and the inadmissible refund.
• Refund Adjusted Against Outstanding Demand: Specifics of unpaid outstanding demands, including the order number and date.
• Balance Refund Amount: In this scenario, the balance payable is zero as the full refund is adjusted against existing demands.

Order for Withholding the Refund (Part B)

Part B of RFD-07 specifies:

• Sanctioned Refund Amount
• Withheld Refund Amount
• Allowed Refund Amount

These details are accompanied by the reasons for withholding the refund.

Whole or Partial Inadmissibility of Refund (RFD-08)

If, after proper assessment, a refund claim is determined to be partially or entirely inadmissible, the GST Officer will issue Form RFD-08. This form essentially serves as a rejection notice, explaining the grounds for the proposed rejection. The notice also requires the taxpayer to submit a response within 15 days of its receipt, providing justification as to why the refund should not be rejected.

Reply to Notice (RFD-09)

Upon receiving a notice in Form RFD-08, the taxpayer must submit a reply using Form RFD-09. This reply should include any requested documents. If no refund is deemed admissible, the GST Officer instructs the applicant to provide a response in RFD-09. The reply must contain the following information:

• Notice Reference Number and Issue Date
• GSTIN/UIN
• Business Name
• Trade Name
• Reply to Notice: The taxpayer must articulate the reasons demonstrating their eligibility for the refund.
• List of Uploaded Documents: All documents specified in RFD-08 must be uploaded when submitting RFD-09.

After receiving the taxpayer's reply in RFD-09, the GST Officer will evaluate whether the refund should be issued.

Payment Advice (RFD-05)

The net refund amount, potentially including interest, is issued by the GST Officer in Form RFD-05. This amount is then electronically credited to the taxpayer's bank account. RFD-05 is also used when an order is made under RFD-06, and the entire refund is to be transferred to the Consumer Welfare Fund.