This article explores Chapter 10 of the Central Goods and Services Tax (CGST) Rules, which outlines the comprehensive procedures for GST refunds. The information presented here is based on the official CGST Rules, 2017, available from cbec.gov.in.

Application for Refund of Tax, Interest, Penalty, Fees or Any Other Amount

1. Any person, excluding those covered under section 55 notifications, who is claiming a refund for tax, interest, penalty, fees, or any other amount paid (other than integrated tax on goods exported from India) may submit an electronic application using FORM GST RFD-01 through the common portal, either directly or via a Facilitation Centre designated by the Commissioner. However, claims for balances in the electronic cash ledger, as per section 49(6), can be made through the respective tax period's return in FORM GSTR-3, FORM GSTR-4, or FORM GSTR-7.

For supplies to a Special Economic Zone (SEZ) unit or developer, the refund application must be filed by:

• The supplier of goods, after the goods have been fully received in the SEZ for authorized operations, with endorsement from the Zone's specified officer.
• The supplier of services, accompanied by proof of service receipt for authorized operations, endorsed by the Zone's specified officer.

For supplies considered deemed exports, the application should be filed by the recipient of such supplies. Moreover, any refund amount, after adjusting the tax payable by the applicant from advance tax deposited under section 27 during registration, must be claimed in their final required return.

2. The application submitted under sub-rule (1) must include any of the following documentary pieces of evidence in Annexure 1 of FORM GST RFD-01, as applicable, to substantiate the applicant's entitlement to a refund:

• The reference number and a copy of the order issued by the proper officer, an appellate authority, Appellate Tribunal, or court that results in the refund, or the reference number of the payment amount specified in section 107(6) and section 112(8) claimed as a refund.
• A statement containing the numbers and dates of shipping bills or bills of export and the corresponding export invoices, when the refund is due to the export of goods.
• A statement including the numbers and dates of invoices and the relevant Bank Realisation Certificates or Foreign Inward Remittance Certificates, as applicable, when the refund is due to the export of services.
• A statement providing the numbers and dates of invoices as detailed in rule 46, along with evidence of the endorsement specified in the second proviso to sub-rule (1), for goods supplied to an SEZ unit or developer.
• A statement containing the numbers and dates of invoices, evidence of the endorsement specified in the second proviso to sub-rule (1), and details of payments, with proof, made by the recipient to the supplier for authorized operations as defined under the Special Economic Zone Act, 2005, for services supplied to an SEZ unit or developer.
• A declaration confirming that the SEZ unit or developer has not claimed the input tax credit for the tax paid by the supplier of goods or services or both, for supplies made to an SEZ unit or developer.
• A statement listing the numbers and dates of invoices, accompanied by other evidence as may be notified, for deemed exports.
• A statement detailing the numbers and dates of invoices received and issued during a tax period, where the claim pertains to a refund of unutilized input tax credit under section 54(3), arising from a higher tax rate on inputs compared to output supplies (excluding nil-rated or fully exempt supplies).
• The reference number of the final assessment order and a copy of that order, when the refund arises from the finalization of provisional assessment.
• A statement outlining transactions initially considered as intra-State supply but subsequently reclassified as inter-State supply.
• A statement showing the amount claimed due to excess payment of tax.
• A declaration affirming that the incidence of tax, interest, or any other amount claimed as a refund has not been passed on to any other person, applicable when the claimed refund amount does not exceed two lakh rupees. This declaration is not required for cases covered under clauses (a), (b), (c), (d), or (f) of section 54(8).
• A Certificate in Annexure 2 of FORM GST RFD-01, issued by a chartered accountant or a cost accountant, confirming that the incidence of tax, interest, or any other claimed amount has not been passed on to any other person, applicable when the claimed refund amount exceeds two lakh rupees. This certificate is not required for cases covered under clauses (a), (b), (c), (d), or (f) of section 54(8).

Explanation:

• For the purposes of this rule:
• In the case of refunds referred to in clause (c) of section 54(8), "invoice" means an invoice that conforms to the provisions of section 31.
• If the tax amount has been recovered from the recipient, it is presumed that the incidence of tax has been passed on to the ultimate consumer.

3. When the application concerns a refund of input tax credit, the applicant's electronic credit ledger must be debited by an amount equivalent to the claimed refund.

4. For zero-rated supply of goods or services or both without tax payment under a bond or Letter of Undertaking, in accordance with section 16(3) of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the input tax credit refund is granted based on the following formula:

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) × Net ITC ÷ Adjusted Total Turnover

Where:

• "Refund amount" refers to the maximum admissible refund.
• "Net ITC" signifies the input tax credit claimed on inputs and input services during the relevant period.
• "Turnover of zero-rated supply of goods" is the value of zero-rated goods supplied without tax payment under a bond or Letter of Undertaking during the relevant period.
• "Turnover of zero-rated supply of services" is the value of zero-rated services supplied without tax payment under a bond or Letter of Undertaking, calculated as the sum of payments received during the relevant period for zero-rated services and zero-rated services completed for which advance payments were received in prior periods, reduced by advances received for zero-rated services not yet completed during the relevant period.
• "Adjusted Total turnover" represents the turnover in a State or Union territory, as defined under section 2(112), excluding the value of exempt supplies (other than zero-rated supplies), during the relevant period.
• "Relevant period" denotes the period for which the claim has been submitted.

5. In the case of refunds due to an inverted duty structure, the input tax credit refund is determined by the 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

Explanation: For this sub-rule, "Net ITC" and "Adjusted Total turnover" have the same meanings as defined in sub-rule (4).

Acknowledgement

1. If the refund application pertains to a claim from the electronic cash ledger, an acknowledgement in FORM GST RFD-02 will be electronically provided to the applicant through the common portal. This acknowledgement will clearly state the date of filing the refund claim, from which the time period specified in section 54(7) will be calculated.

2. For refund applications not involving the electronic cash ledger, the application will be forwarded to the proper officer. Within fifteen days of its filing, the officer will scrutinize the application for completeness. If the application is found to be complete according to sub-rules (2), (3), and (4) of rule 89, an acknowledgement in FORM GST RFD-02 will be electronically made available to the applicant through the common portal, indicating the filing date for the purpose of section 54(7) calculations.

3. Should any deficiencies be identified, the proper officer will electronically communicate these deficiencies to the applicant using FORM GST RFD-03 via the common portal. The applicant will be required to submit a new refund application after rectifying these issues.

4. If deficiencies have been communicated in FORM GST RFD-03 under the State Goods and Service Tax Rules, 2017, these will be considered also communicated under this rule, in conjunction with any deficiencies communicated under sub-rule (3).

Grant of Provisional Refund

1. Provisional refunds, as stipulated by section 54(6), are granted only if the person claiming the refund has not been prosecuted for any offense under the Act or a previous law involving tax evasion exceeding two hundred and fifty lakh rupees, during any period of five years immediately preceding the tax period to which the refund claim relates.

2. After reviewing the claim and supporting evidence, if the proper officer is initially satisfied that the amount claimed as a refund under section 54(6) is due to the applicant, an order in FORM GST RFD-04 will be issued. This order sanctions the provisional refund amount within a period not exceeding seven days from the date of the acknowledgement under rule 90(1) or 90(2).

3. The proper officer will then issue a payment advice in FORM GST RFD-05 for the sanctioned amount. This amount will be electronically credited to one of the applicant's bank accounts listed in their registration details and specified in the refund application.

Order Sanctioning Refund

1. After examining the application, if the proper officer is satisfied that a refund under section 54(5) is due and payable to the applicant, an order in FORM GST RFD-06 will be issued. This order will specify the amount of refund the applicant is entitled to, noting any amount provisionally refunded under section 54(6), any amount adjusted against outstanding demands under the Act or existing laws, and the remaining refundable balance. However, if the entire refund amount is adjusted against an outstanding demand, an order detailing this adjustment will be issued in Part A of FORM GST RFD-07.

2. If the proper officer or the Commissioner believes that the refund amount should be withheld under section 54(10) or, as applicable, section 54(11), an order in Part B of FORM GST RFD-07 will be issued, informing the applicant of the reasons for withholding the refund.

3. If the proper officer is satisfied, based on written reasons, that the whole or part of the claimed refund is inadmissible or not payable to the applicant, a notice in FORM GST RFD-08 will be issued to the applicant. The applicant must respond in FORM GST RFD-09 within fifteen days of receiving the notice. After considering the reply, an order in FORM GST RFD-06 will be issued, sanctioning the refund in whole or in part, or rejecting the claim. This order will be electronically accessible to the applicant, and the provisions of sub-rule (1) will apply mutatis mutandis to the extent the refund is allowed. Crucially, no refund application will be rejected without providing the applicant an opportunity to be heard.

4. If the proper officer is satisfied that the amount refundable under sub-rule (1) or sub-rule (2) is payable to the applicant under section 54(8), an order in FORM GST RFD-06 will be issued, along with a payment advice in FORM GST RFD-05 for the refund amount. This amount will be electronically credited to one of the applicant's bank accounts specified in their registration particulars and in the refund application.

5. If the proper officer determines that the amount refundable under sub-rule (1) or sub-rule (2) is not payable to the applicant under section 54(8), an order in FORM GST RFD-06 will be issued, and an advice in FORM GST RFD-05 will be generated for the refund amount to be credited to the Consumer Welfare Fund.

Credit of the Amount of Rejected Refund Claim

1. If any deficiencies have been communicated under rule 90(3), the amount debited from the electronic credit ledger under rule 89(3) will be re-credited.

2. If any amount claimed as a refund is rejected, either fully or partially, under rule 92, the corresponding debited amount, to the extent of the rejection, will be re-credited to the electronic credit ledger by an order made in FORM GST PMT-03.

Explanation: For the purposes of this rule, a refund is considered rejected if the appeal is ultimately denied, or if the claimant provides a written undertaking to the proper officer stating they will not file an appeal.

Order Sanctioning Interest on Delayed Refunds

When any interest is due and payable to the applicant under section 56, the proper officer will issue an order along with a payment advice in FORM GST RFD-05. This document will specify the delayed refund amount, the period of delay for which interest is payable, and the total interest amount. This interest amount will be electronically credited to one of the applicant's bank accounts listed in their registration particulars and as specified in the refund application.

Refund of Tax to Certain Persons

1. Any person eligible to claim a refund of tax paid on their inward supplies, as per a notification issued under section 55, must apply for the refund in FORM GST RFD-10 once every quarter. The application must be filed electronically on the common portal (either directly or through a Facilitation Centre notified by the Commissioner) within 18 months from the last day of the Quarter. It must be accompanied by a statement of inward supplies of goods or services or both in FORM GSTR-11, prepared based on the outward supply statements provided by corresponding suppliers in FORM GSTR-1.

2. An acknowledgement confirming the receipt of the refund application will be issued in FORM GST RFD-02.

3. The tax refund paid to the applicant is conditional upon:

• The inward supplies of goods or services or both being received from a registered person against a tax invoice, where the price of the supply covered under a single tax invoice exceeds five thousand rupees, excluding any tax paid.
• The applicant's name and Goods and Services Tax Identification Number (GSTIN) or Unique Identity Number (UIN) being clearly stated on the tax invoice.
• The fulfillment of any other restrictions or conditions as specified in the notification.

4. The provisions of rule 92 will apply mutatis mutandis for the sanction and payment of refunds under this rule.

5. If an explicit provision in a treaty or other international agreement, to which the President or the Government of India is a party, conflicts with the provisions of this Chapter, that treaty or international agreement shall take precedence.

Refund of Integrated Tax Paid on Goods Exported out of India

1. The shipping bill filed by an exporter is considered an application for refund of integrated tax paid on goods exported from India. This application is deemed to be filed only when:

• The person in charge of the conveyance carrying the export goods duly files an export manifest or an export report, including the numbers and dates of the shipping bills or bills of export.
• The applicant has furnished a valid return in FORM GSTR-3 or FORM GSTR-3B, as applicable.

2. Details of the relevant export invoices contained in FORM GSTR-1 will be electronically transmitted from the common portal to the system designated by Customs. This Customs system will then electronically transmit a confirmation to the common portal that the goods covered by these invoices have been exported from India.

3. Upon receiving confirmation from the common portal regarding the submission of a valid return in FORM GSTR-3 or FORM GSTR-3B (as applicable), the Customs-designated system will process the refund claim. An amount equivalent to the integrated tax paid for each shipping bill or bill of export will be electronically credited to the applicant's bank account, as recorded in their registration particulars and as informed to the Customs authorities.

4. The refund claim will be withheld if:

• A request has been received from the jurisdictional Commissioner of central tax, State tax, or Union territory tax to withhold the refund payment due to the person claiming the refund, in accordance with section 54(10) or section 54(11).
• The proper officer of Customs determines that the goods were exported in violation of the Customs Act, 1962.

5. If a refund is withheld under sub-rule (4)(a), the proper officer of integrated tax at the Customs station will notify the applicant and the jurisdictional Commissioner of central tax, State tax, or Union territory tax (as applicable). A copy of this intimation will also be transmitted to the common portal.

6. Following the transmission of the intimation under sub-rule (5), the relevant proper officer (central tax, State tax, or Union territory tax) will issue an order in Part B of FORM GST RFD-07.

7. When the applicant becomes entitled to the refund amount withheld under sub-rule (4)(a), the concerned jurisdictional officer will proceed to refund the amount after issuing an order in FORM GST RFD-06.

8. The Central Government may pay integrated tax refunds to the Government of Bhutan for specific classes of goods exported to Bhutan, as may be notified. In such instances, the exporter will not receive any refund of the integrated tax.

Refund of Integrated Tax Paid on Export of Goods or Services Under Bond or Letter of Undertaking

1. Any registered person choosing to supply goods or services for export without paying integrated tax must, prior to export, furnish a bond or a Letter of Undertaking in FORM GST RFD-11 to the jurisdictional Commissioner. This document obligates them to pay the due tax, along with interest specified under section 50(1), within a period of:

• Fifteen days after three months from the date of issue of the invoice for export, if the goods are not exported from India.
• Fifteen days after one year (or any further period allowed by the Commissioner) from the date of issue of the invoice for export, if payment for such services is not received by the exporter in convertible foreign exchange.

2. The details of the export invoices contained in FORM GSTR-1, submitted on the common portal, will be electronically transmitted to the Customs-designated system. This system will then electronically confirm to the common portal that the goods covered by those invoices have been exported from India.

3. If the goods are not exported within the timeframe specified in sub-rule (1) and the registered person fails to pay the amount mentioned, the export permission granted under bond or Letter of Undertaking will be immediately revoked, and the amount will be recovered from the registered person according to section 79.

4. The export permission revoked under sub-rule (3) will be reinstated immediately once the registered person pays the outstanding amount.

5. The Board may, through notification, specify the conditions and safeguards under which a Letter of Undertaking may be furnished in place of a bond.

6. The provisions of sub-rule (1) apply mutatis mutandis to zero-rated supply of goods or services or both to an SEZ developer or an SEZ unit without integrated tax payment.

Consumer Welfare Fund

1. All credits to the Consumer Welfare Fund are made under rule 92(5).

2. Any amount credited to the Fund, which is subsequently ordered or directed to be paid to any claimant by orders of the proper officer, appellate authority, Appellate Tribunal, or court, shall be disbursed from the Fund.

3. Any utilization of funds from the Consumer Welfare Fund under section 58(1) involves debiting the Consumer Welfare Fund account and crediting the account to which the amount is transferred for utilization.

4. The Government will establish a Standing Committee, comprising a Chairman, a Vice-Chairman, a Member Secretary, and other members as deemed fit. This Committee will formulate recommendations for the effective utilization of money credited to the Consumer Welfare Fund for consumer welfare.

5. The Committee will meet as frequently as necessary, but at least once every three months.

6. An agency or organization engaged in consumer welfare activities for a period of three years (registered under the Companies Act, 2013, or other applicable laws, including village/mandal/samiti level consumer cooperatives, particularly those for Women, Scheduled Castes, and Scheduled Tribes), or any industry (as defined in the Industrial Disputes Act, 1947) recommended by the Bureau of Indian Standards to have been engaged for five years in viable and useful research contributing significantly to the formulation of standard marks for mass consumption products, or the Central/State Government, may apply for a grant from the Consumer Welfare Fund. Additionally, a consumer may apply for reimbursement of legal expenses incurred as a complainant in a consumer dispute after its final adjudication.

7. All applications for grants from the Consumer Welfare Fund must be submitted by the applicant Member Secretary. However, the Committee will only consider an application if it has been thoroughly investigated in material details and recommended for consideration by the Member Secretary.

8. The Committee possesses the following powers:

• To require any applicant to produce, before it or a duly authorized Government Officer, such books, accounts, documents, instruments, or commodities under the applicant's custody and control, as necessary for proper application evaluation.
• To require any applicant to permit entry and inspection of any premises, where consumer welfare activities are claimed to be conducted, by a duly authorized officer of the Central Government or, as applicable, State Government.
• To audit the applicants' accounts to ensure proper utilization of the grant.
• To require any applicant, in case of default or suppression of material information, to refund the sanctioned grant in a lump sum to the Committee and to be subject to prosecution under the Act.
• To recover any sum due from any applicant in accordance with the Act's provisions.
• To require any applicant or class of applicants to submit a periodical report, indicating proper utilization of the grant.
• To reject an application presented to it due to factual inconsistency or inaccuracy in material particulars.
• To recommend minimum financial assistance, by way of a grant to an applicant, considering their financial status and the importance and utility of the nature of the activity pursued, while ensuring the financial assistance is not misused.
• To identify beneficial and safe sectors where investments from the Consumer Welfare Fund may be made and make corresponding recommendations.
• To relax the conditions concerning the period of engagement in consumer welfare activities for an applicant.
• To establish guidelines for the management, administration, and auditing of the Consumer Welfare Fund.

9. The Central Consumer Protection Council and the Bureau of Indian Standards will advise the Goods and Services Tax Council on broad guidelines for evaluating projects and proposals involving expenditures from the Consumer Welfare Fund.