Goods and Service Tax cannot be written off easily, as many of the
politically motivated sections of the society may presume. Recently a Report of
the Joint Committee on Business processes for GST on Refund processes was made
public by the Empowered Committee of State Finance Ministers. In the taxation
administration, refund refers to any amount that is due to the tax payer from
the tax administration. In the present taxation system it is considered as a
strained area, both for the taxpayer and the tax administration. So in order to
establish an effective and efficient tax administration system it is essential
that issues on which refund arises ought to be kept at minimum and be clearly
defined in the law. Since GST is going to subsume many of the existing taxation
laws such as Central Excise, Service Tax, VAT, CST, etc., the situations under
which refund arise under these laws are as follows:
(A) Excess payment of tax due to
mistake or inadvertence.
(B) Export (including deemed
export) of goods / services under claim of rebate or Refund of accumulated
input credit of duty / tax when goods / services are exported.
(C) Finalization of provisional
assessment.
(D) Refund of Pre – deposit for
filing appeal including refund arising in pursuance of an appellate authority’s
order (when the appeal is decided in favor of the appellant).
(E) Payment of duty / tax during
investigation but no/ less liability arises at the time of finalization of
investigation / adjudication.
(F) Refund of tax payment on
purchases made by Embassies or UN bodies.
(G) Credit accumulation due to
output being tax exempt or nil-rated.
(H) Credit accumulation due to
inverted duty structure i.e. due to tax rate differential between output and
inputs.
(I) Year-end or volume based
incentives provided by the supplier through credit notes.
(J) Tax Refund for International
Tourists
Each of the situations mentioned above are discussed individually
for better appreciation of the issue and the proposed process to handle them
under the proposed GST regime in the said Report of the Joint Committee on
Business processes for GST on Refund processes was made public by the Empowered
Committee of State Finance Ministers.
The GST committee has released a draft report for the comments of
stake holders on issues / topics concerning types of refund forms. It discusses
as to what should be the time period for filing of refund and relevant date. It
also discusses details of supporting documents: receipt of refund application
and procedure for generating proof of receipt of application for refund. The
issue regarding number of copies of applications to be filed including
Requirement for taxpayer to keep a copy of refund application for the
prescribed period is also mentioned in the report. Procedure and time within
which preliminary scrutiny of submission of the relevant documents is carried
out, procedure for dealing with refund thereafter including examination of
principle of “unjust enrichment” as also a part of this report. Moreover,
minimum amount below which refund shall not be granted, sanctioning of refund,
verification and control, interest, adjustment, recovery of erroneous refund
are also covered in detail in the said report for the stakeholders to peruse
and give their suggestions. This sends the signals that the government is
serious in implementing Goods and Service Tax as early as possible.