Useful recommendations of GST Council for exporters

In its 47th meeting last week, the Goods and Services Tax (GST) Council recommended some facilitation measures that will help exporters.

In 2019, the Central Board of Indirect Taxes and Customs (CBIC) had introduced a mechanism to hold in abeyance the refund of Integrated GST (IGST) paid on export goods to exporters identified as risky, based on certain criteria that are not made public. They were subject to additional checks that took a long time. The CBIC issued circulars on June 17, 2019, (no.16/2019-Cus) and May 20, 2010, (no.131/1/2020-GST) prescribing additional safeguards and standard operating procedures. The mechanism was not working well and, so, the GST Council has now recommended suitable amendments to Rule 96 of the Central GST Rules (CGST Rules) to provide for transmission of such IGST refund claims on the portal in a system generated FORM GST RFD-01 to the jurisdictional GST authorities for processing.

Hopefully, this would result in expeditious disposal of such IGST refund claims, after due verification by GST officers.

Sometimes, the exporter is required to return part or full amount of the refund received of the IGST paid on export of goods or of unutilised input tax credit (ITC) on account of exports without payment of IGST. But there was no procedure for getting re-credit of the amount deposited. The Council has now said re-credit of such amounts will be given in the electronic credit ledger. A new FORM GST PMT-03A is introduced for the same. This change will help the exporters.

A useful recommendation is to amend the explanation to Rule 43 of the CGST Rules, 2017, enabling waiver of the requirement to reverse the ITC for exempted supply of duty credit scrips by the exporters. The present exemption of IGST on import of goods under advance authorisation, Export Promotion Capital Goods (EPCG) authorisation and by Export-Oriented Units will be continued. The finance ministry has issued notification no.37/2022-Cus dated June 30, 2022, giving effect to this decision. The e-wallet scheme for exporters mooted in October 2017, a non-starter from the outset, will not be pursued further. To facilitate refund of unutilised ITC on account of zero rated supply of electricity, the CGST Rules will be amended suitably. Clarification on the issues pertaining to refund claimed by the recipients of supplies regarded as deemed export will be issued.  The specified officers or authorised officers at the Special Economic Zones (SEZ) Customs stations will process the refund claims pertaining to supplies to units or developers in SEZ, after suitable amendments at Rule 89(1) of the CGST Rules, 2017.  

The Council now says supplies from such duty free shops (DFS) at the departure area of the international airport beyond immigration counters to outgoing international passengers will be treated as exports by DFS and consequential refund benefits will be available to them on such supplies. Accordingly, Rule 95A of the CGST Rules and the related notifications and circular, that were subject matter of disputes in some Courts, will be rescinded.

The Council has decided to constitute a group of ministers to address various concerns raised by the states in relation to the constitution of GST Appellate Tribunal and make recommendations for appropriate amendments in CGST Act, 2017. Hopefully, the tribunals will be established soon reducing the load on the high courts.

Email: tncrajagopalan@gmail.com