Supplier to merchant exporter can claim refund of unutilised credit

We are supplying to merchant exporter and charging 0.1 per cent IGST. Our ITC is accumulated. Can we file refund application on the grounds of inverted tax structure?

Yes. You can do so under Section (3) (ii) of CGST Act, 2017 read with rule 89 of the CGST Rules, 2017 and in accordance with CBEC Circular no.24/24/2017-GST dated December 21, 2017. 

Your write-up, “IGST rules change again for export” (Business Standard, February 19, 2018),mentions notification no. 3/2018 GST dated January 23, 2018. But I could not find the stipulation regarding export without IGST payment under Advance Authorisation in the said notification. Please advise.

The notification 3/2018-Central Tax dated January 3, 2018 is available in the CBEC website at this link: http://www.cbec.gov.in/resources//htdocs-cbec/gst/Notification-3-2018-central_tax-English_New.pdf.  It amends several provisions of the CGST Rules, 2017. Please see Rule 96 (10) of the same. It says, among other things, that the persons claiming refund of integrated tax paid on exports of goods or services should not have received supplies on which the supplier has availed the benefit of the notification 79/2017-Customs dated October 13, 2017. My write-up dealt with the implications of this change, besides other changes. So, you may not find in the notification the same words that I have used. 

I understand that EPCG/Advance Authorisation issued will be governed by policy under which it was issued. The obligation has been fulfilled and request for redemption is submitted with Joint DGFT, or yet to be submitted, and there is change in procedure as is in case of Para 5.10(d) of HBP-I. Is it obligatory for exporter to follow the changed procedure?

Yes. You have to follow the procedures applicable on the date you operate the procedures. Please see Public notice no. 43/2015-20 dated December 5, 2017 and Para 1.01 of the HBP. 

Our item to be imported under advance authorisation -- flat-rolled products of stainless steel covered under ITC(HS) Codes: 7219 or 7220 -- was already issued. It was placed in Appendix-4J on October 18, 2017. Please clarify whether extension in export obligation period will be done in terms of Para 4.42 (d) or 4.42 (e).

Para 4.42 (d) of HBP says, “Extension in export obligation period for Authorisations issued under Appendix-4J (issued under FTP 2015-20) shall be allowed for a period not more than the half of the stipulated export obligation period.” This provision is specific to advance authorisations issued under Appendix-4J. In your case, the authorisation was not issued under Appendix-4J. So, in my opinion, you need not seek extension in export obligation period under Para 4.42 (d) of HBP and the authorities should consider the request for extension in export obligation period under Para 4.42 (e) of HBP. 

Can we clear samples supplied free of cost without GST payment?

Yes. But as per Section 17(5)(h) of CGST Act, 2017, input tax credit shall not be available for the same. You have to reverse the credit taken.