The issue of blocked IGST refunds due to various mismatches in case of Exports on payment of IGST was long pending. The biggest reason for such blockage was mismatch in invoice data between Customs EDI System, i.e., Shipping Bill details and GST Network data, i.e., details of Table 6A of GSTR-1. Procedure for resolution of the same finally been provided vide circular No 05/2018-Customs dated 23rd February 2018. A brief note on the issue along with methodology provided is discussed hereunder:
- This issue of blockage of refund was a major woe for the exporting community all over India who had made exports on payment of IGST and refund of which was blocked due to various reasons. Most of the refunds were blocked due to the reason of mis-match of Invoice data as referred above. Out of old practice two sets of invoices were being made by the exporters – one for the shipping bill and another for GST (earlier for excise purpose). Generally, along with various other data, the invoice series for both the sets were also different. Such variance caused the referred mismatches.
- In GST regime there is no requirement of two sets of invoices for exports.
- The blockage of refunds was duly recognized by the government vide various circulars and trade notices from time to time. However, no resolution was provided till date.
- As on date the exporters are in a stage were huge working capital is blocked and exporters are unable to conduct their business properly and are undergoing unnecessary hardships. Many exporters have also resorted to loans against the blocked refunds for coping up with cash flow issues.
- The current circular dated 23-02 -2018 provides for matching of the invoice data in GST returns vis-a-vis shipping bill vide a concordance table. Brief procedure for the said refund process is as under:
– Concordance Table is to be submitted in Custom House (to be notified later) and e-mail address of Custom location where exports took place (to be notified later).
– Concerned Officer to verify the details being reflected in the Customs EDI System, GST Network and Concordance Table.
– Officer to determine the refund amount and update Customs EDI System.
– Once all invoices pertaining to a particular shipping bill are verified, post reduction of drawback amount, scroll amount shall be calculated and displayed to the concerned officer for approval.
– Once refund is sanctioned by the concerned officer shipping bill would be available for generating scroll as per normal process.
– This procedure is available only for Shipping Bills filed till 31st December 2017.
- It must be ensured that the refund amount claimed by the exports is not more than IGST paid. In case such an error has happened the same may be rectified vide Table 9 of GSTR-1 in the subsequent period.
- Method for tracking of refund status and errors pertaining to shipping bill is provided on the ICEGATE website. The refund status associated with Exports can be checked through GSTIN Number, Port-code and GST Return Month.
- The referred Circular No 05/2018- Customs dated 23rd February, 2018 is available here: Circular 05/2018 Cus – Export-Refund of blocked IGST
– Team ALA Legal
GST Law India is a blog on GST and allied commercial laws managed by members of the law firm ALA Legal.