Shaleen Shah[By Shaleen Shah (Partner), VNCA]
Exports is `zero rated’ in GST for which exporter of goods has two options viz. (1) supply under LUT without payment of IGST and claim refund of unutilised ITC; or (2) supply on payment of IGST and claim refund of such IGST paid on exports.
Rule 96(10) of the Central Goods and Services Tax Rules, 2017 (CGST Rules), restricts exporters from claiming refund of IGST paid on exports in certain scenarios.
There have been several amendments (back & forth) on this issue. Refer CGST Rule 96(9) Original, amended by Notification No. 3/2018-CT w.r.e.f. 23-10-17, further amended by Notification Nos. 39/2018-CT, 53/2018-CT & 54/2018-CT.
The net effect of these changes would be that upto 8-10-2018, any exporter who has himself imported any inputs/capital goods in terms of Notification Nos. 78/2017-Cus and 79/2017-Cus both dated 13th October, 2017 shall be eligible to claim refund of the IGST paid on exports.
w.e.f. 9-10-2018 if the exporter has availed benefit under Notification Nos. 78/2017-Cus or 79/2017-Cus, refund shall now be allowed only of unutilised input tax credit on account of zero rated supplies without payment of tax. Hence exporter making zero rated supplies with payment of tax shall not be eligible for refund and for him the only option is to export under LUT. However, if such person has only availed the benefit in respect of capital goods under EPCG, he can still export on payment of IGST and claim refund of the same.
Rule 96(10) of CGST Rules (as amended) states –
…the persons claiming refund of integrated tax paid on exports of goods or services should not have –
(b) availed the benefit under notification No. 78/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1272(E), dated the 13th October, 2017 or notification No. 79/2017-Customs, dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R 1299 (E), dated the 13th October, 2017 except so far it relates to receipt of capital goods by such person against Export Promotion Capital Goods Scheme.
Notification No. 78/2017-Customs – Said Notification read with parent Notification provides exemption from Customs Duty & IGST under Customs on goods imported or procured from Public or Private Warehouse or from International Exhibition by Hundred per cent EOU, STP or EHTP units. Said exemption has now been extended till 31.03.2019.
Notification No. 79/2017-Customs – Said Notification read with parent Notification provides exemption from Customs Duty & IGST under Customs on imports under EPCG, Advance Authorization, Advance Authorization for Annual Requirements, Advance Authorization for Deemed Export, Advance Authorization for export of Prohibited Goods and Narrow Woven Fabrics, etc. Said exemption has now been extended till 31.03.2019.
