Grappling with exporter credit

The Central Board of Excise and Customs (CBEC) has put in place an alternative mechanism to refund Integrated Goods and Services Tax (IGST) already paid on goods exported. Under the system till now, refunds of only ·40 billion have been granted.

Essentially it involves the intervention of Customs officers, who will verify the information furnished on the Goods and Services Tax Network (GSTN, the system’s information technology backbone) and the Customs EDI (Electronic Data Interchange) system. And, sanction refund in cases where invoice details provided in Table 6A of GSTR-1 returns are correct, even if at variance with details provided in the shipping bill. 

For this, CBEC has prescribed a form that exporters must send to the Customs, giving details of taxable value and tax amount in the GST invoice and shipping bill. The appropriate officer will verify the details, determine the correct refund amount and enter this into the Customs EDI system. Plus, if need be, edit the IGST paid details in a case of short shipment or incorrect calculation by the exporter. Thereafter, a payment scroll will be generated as in the normal process, based on which the exporter’s bank account will be credited electronically through the Public Finance Management System. 

There is another development on Cenvat credit. CBEC says if its eligibility is under dispute and disallowed through an Order in Original (OIO) or Order in Appeal (OIA) under the erstwhile law, this cannot be carried forward as transitional credit. If carried forward, cannot be utilised to discharge any GST liability. It is not clear what the position is if an appeal against such an OIO/OIA is pending before the appellate forums. Or how to decide whether the credit disallowed vide an OIO/OIA is part of the balance carried forward as transitional credit. 

Meanwhile, GSTN has introduced some facilitation measures. Once any GST Identification Number (GSTIN) is fed into the system, taxpayer details like legal name, status (active or cancelled), jurisdiction office and status of the past 10 returns -- showing return type, financial year, tax period, date of filing and status (whether GST paid or not) will show up. Thus, buyers would be able to know the return filing status of suppliers. Letters of Undertaking for export of goods and services without payment of IGST may now be filed online. The GSTR-3B return has been simplified to the extent that the tax amount due is visible to assessees even before they submit the return. They will be shown only those tiles that are relevant for them.

The Directorate General of Foreign Trade has asked its regional offices to process applications for duty credit scrips under the Merchandise Exports from India (MEIS) scheme only on the basis of the iTC (HS) Code declared in the shipping bill. However, in the case of 154 specified codes, MEIS claims will be processed only after matching the notified code and description with those declared in the shipping bill. The relaxation will help clear MEIS claims that are stuck due to mismatch in the description. Surprisingly, however, cases rejected earlier due to mismatch in description will not be re-assessed, which seems unfair. 

These measures will help but not compensate for the grave consequences of delay in grant of refund for taxes already paid by exporters.   

E-mail: tncrajagopalan@gmail.com