Trail of queries on rule change

Exporters hit by a retrospective amendment to Rule 96 (10) of the Central Goods and Services Tax Rules, 2017, have many questions.

The change denies any refund of Integrated Goods and Service Tax (IGST) paid on exported goods, if the exporter had imported the inputs under advance authorisation without payment of IGST, under notification 79/2017-Cus dated October 13 last year.

What happens to the refunds already granted? Will penalties be levied for wrongfully claiming these?  Will all the refunds have to be given back, with interest? If so, what is the procedure? If the refund is surrendered after filing the annual return and it pertains to exports made in the past financial year, will input tax credit of the IGST paid be available? If so, what is the procedure to claim and report that? May the exporter claim refund of the input tax credit? If so, how, when the provision for doing so prescribes a formula based on the input tax credit availed on inputs and input services during the period for which the claim has been filed?

For most exporters, the amount of IGST to be refunded might be much higher than the exemption they’d availed of on the import under advance authorisation. May they be allowed to pay the IGST on imported input with interest and get out of the obligation to pay IGST on the exported goods? Of course, they would like to take credit of the IGST paid on the inputs.

And, what happens if the exporter pays IGST on inputs imported under advance authorisation but takes the exemption on anti-dumping duty or safeguard duty or anti-subsidy countervailing duty – all of which also find mention in the said notification, 79/2017-Cus? Would that also result in denial of the refund of IGST paid on exported goods?

The amendment says those claiming refund of IGST paid on export of goods should not have availed of the benefit under the said 79/2017-Cus notification. Quite obviously, it targets the person who has imported without IGST payment under advance authorisation. What it means is, if an exporter has made, say, 100 shipments, and only one of these is of goods manufactured from inputs imported without IGST payment under advance authorisation, then he has to forgo refund claims on all his shipments. On the ground that he is the person who had availed of the benefit of the said notification, 79/2017. Is that the real intention of the government?

This amendment to Rule 96 (10) also denies refund of IGST paid on exported goods if export-oriented units had imported their inputs without payment of IGST under notification 78/2017-Cus of October 13, 2017. They have similar queries.

The Central Board of Indirect Taxes (CBIC) says registered persons, including importers, who are directly importing supplies on which the benefit of no-tax incidence under certain specified notifications had been availed of, shall not be eligible for refund of IGST paid on export of goods or services. Now, why should import of capital goods without IGST payment under notification 79/2017-Cus result in denial of refund of IGST paid on exported goods?

These are only some of the questions that have agitated exporters since the amendment was issued. CBIC should issue a clarification on these issues. Even better, the retrospective amendment be reviewed.

E-mail: tncrajagopalan@gmail.com