MM TAX CLUB

Circular No. 174/06/2022-GST Dated the6thJuly, 2022

Difficulties were being faced by the taxpayers in taking re-credit of the amount in the electronic credit ledger in cases where any excess or erroneous refund sanctioned to them had been paid back by them either on their own or on being pointed by the tax officer. In order to resolve this issue, GSTN has recently developed a new functionality of FORM GST PMT-03Awhich allows proper officer to re-credit the amount in the electronic credit ledger of the taxpayer. Further, sub-rule (4B) in rule 86 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”)has been inserted vide Notification No. 14/2022-CT dated 05.07.2022  to  provide  for  re-credit  in  the  electronic  credit  ledger where  the  taxpayer deposits the erroneous refund sanctioned to him.

2.         In order to ensure uniformity in the implementation of the above provisions of the law across field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the following:

3.         Categories of refunds where re-credit can be done using FORM GST PMT-03A:

            Reference is invited to sub-rule (4B) of rule 86 of the CGST Rules, which is reproduced as under:

(4B) Where a registered person deposits the amount of erroneous refund sanctioned to him –

1. under sub-section (3) of section 54 of the Act, or
2. under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96,

along with interest and penalty, wherever applicable, through FORM GST DRC-03,in  cash, 

on  his  own  or  on  being  pointed  out,  an  amount  equivalent  to  the  amount  of erroneous  refund  deposited  by  the  registered  person  shall  be  re-credited  to  the electronic credit ledger by the proper officer by an order made in FORM GST PMT-03A.

From  the  above,  it  can  be  stated  that in  respect  of the following  categories  of  refund sanctioned erroneously, re-credit of amount in the electronic credit ledger can be done through FORM GST PMT-03A, on deposit of such erroneous refund along with interest and penalty, wherever applicable, by the taxpayer:

1. Refund of IGST obtained in contravention of sub-rule (10) of rule 96.

b.   Refund of unutilised ITC on account of export of goods/services without payment of tax.

c.   Refund of unutilised ITC on account of zero-rated supply of goods/services to SEZ developer/Unit without payment of tax.

d.   Refund of unutilised ITC due to inverted tax structure

4.         Procedure for re-credit of amount in electronic credit ledger:

                The taxpayer shall deposit the amount of erroneous refund along with applicable interest and penalty, wherever  applicable, through FORM  GST  DRC-03bydebit  of  amount  from electronic cash ledger. While making the payment through FORM GST DRC-03, the taxpayer shall clearly mention the reason for making payment in the text box as the deposit of erroneous refund of unutilised ITC, or the deposit of erroneous refund of IGST obtained in contravention of sub-rule (10) of rule 96 of the CGST Rules.

            Till  the  time an  automated  functionality  for handling  such  cases  is  developed  on  the portal,  the  taxpayer  shall  make  a  written  request, in  format  enclosed  as Annexure-A, to jurisdictional  proper  officer  to  re-credit  the  amount  equivalent  to  the  amount  of  refund  thus paid back through FORM GST DRC-03, to electronic credit ledger.

The proper officer, on being satisfied that the full amount of erroneous refund along with applicable interest, as per the provisions of section 50 of the CGST Act, and penalty, wherever applicable, has been paid by the said registered person in FORM GST DRC-03by way  of debit in electronic  cash  ledger,  he  shall  re-credit  an  amount in  electronic  credit  ledger, equivalent to the amount of erroneous refund so deposited by the registered person, by passing an order in FORM GST PMT-03A, preferably within a period of 30 days from the date of receipt  of  request  for  re-credit  of  erroneous  refund amount  so  deposited  or  from  the  date  of payment  of  full  amount  of  erroneous  refund  along  with  applicable  interest,  and  penalty, wherever applicable, whichever is later.

5.         It is requested that suitable trade notices may be issued to publicize the contents of this Circular.

6.         Difficulty, if any, in the implementation of this Circular may be brought to the notice of the Board. Hindi version will follow.

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