GST Advisory

Manner of Processing & Sanction of IGST Refunds: CBIC

Manner of Processing & Sanction of IGST Refunds: CBIC

CBIC has issued instructions on 28th  November 2022  vide Instruction No/ 04/2022  in respect of the manner of processing and sanction of the IGST refunds withheld in terms of Rule 96(4)(c), which were transmitted to the jurisdictional GST authorities under Rule 96(5) of the CGST Rules.

The article discusses the instructions in detail to explain the same in a simplified manner. 

  • On 23.01.2022 , SOPs[1] were issued to CGST, Customs formations, as well as the DGARM for verification of risky exporters and their suppliers, followed by another SOP dated 25.05.2020 which was issued to CGST formations and DGARM, vide F. No. CBEC-20/16/07/2020-GST provides the procedure that must be followed by the authorities for verification of the risky exporters and their suppliers.
  • According to the SOP, the DGARM would be required to identify the exporters and their suppliers based on the risk parameters as approved by the Competent Authority and will forward the list of those exporters to the (RMCC) for putting an alert in the system. The Custom Field Formation had to conduct a detailed verification of the export goods of the exporters so identified, and the jurisdictional CGST formations were needed to conduct a detailed verification of the exporters so identified along with their suppliers and forward the verification report to DGARM.
  • After receiving the verification report from the CGST Formation, the DGARM had to decide whether to issue the NOC or not; if DGARM decided to issue the NOC, it must be informed to the authorities of custom at the port of export for the purpose of releasing the IGST refunds of the concerned exporters followed by reviewing if the exporters were required to be removed from the list of identified exporters.
  • Rule 96 0f of the CGST Rules, 2017 was amended retrospectively on 01.07.2017 to enumerate the withholding of the IGST refunds wherein it was necessary to verify the credentials of the exp0orters who were identified based on the data analytics inclusive of the ailment of ITC before granting the refund.
  • The board authorised the Principal DG / D(DGARM), CI3IC, New Delhi, to exercise the functions provided under clause 96(4)(c) of the CGST Rules vide Order No. 01/2022-GST on 21st July 2022 issued vide CBIC-20023/04/2021-GST.
  • Another sub-rule, i.e. sub-rule (5A), was inserted in rule 96 to enumerate the transmission of IGST refund withheld as per the provisions of 96(4)(c) of the CGST Rules as a system-generated refund in Form GST RFD-01 providing that the said system generated form would be considered to be the application for refund in those cases, and filed on the date of the transmission on the portal. Sub-rule (5C) have also been inserted in rule 96, which states that system-generated refund in FORM GST RFD-01 is required to be dealt with according to rule 89, i.e. in a manner like other GST RFD-01 refund claims.
  • After the due consideration of the above-mentioned amendments, there were certain changes made to the alert module of ICES for which all the system managers were issued an advisory vide Advisory no 14 dated 29th September 2022 through the DO systems. The advisory was issued to inform the managers about a new role being developed for them in respect of putting an all-India suspension by GSTIN or IEC of the exporter, depending on the case, for withholding IGST returns, along with an option to revoke the same.  
  • The instructions were also issued to the Custom Fields formation through the DG systems vide DGSYS/APP/ICES/GEN/41/2022 on the same date mentioned above, which was in regard to the Lost Refunds that are withheld due to DGARM alerts on risky exporters.
  • On the basis of the risk parameters and data analysis, the DGARM would identify those exporters whose verification of credentials, including availing of ITC, is considered essential before granting the refund, after which the authority shall place an all-India alert of such exporter on the EDI systems of Indian customs along with mentioning the reasons of the said alert.
  • The IGST return of those exporters shall be withheld, and the data regarding the shipping bills as filled by the exporter for which the IGST scroll couldn’t be generated due to the alert of DGARM would be transmitted to GSTN through ICEGATE for the generating refund claims in FORM GST RFD-0l as per the provisions of sub-rule (5A) of rule 96 not before specifying the reasons for such transmission. Besides the previous cases wherein the exporter was considered risky which couldn’t be processed due to receiving a negative report, or pending verification would be transmitted to GSTN via the ICEG ATE for generating the refund claims through FORM GST RFD-01 as per the provisions of sub-rule (5A) of rule 96.
  • The refund claims would be provided to the jurisdictional officer on the back office system under the category named “Any other (GST paid on export of goods)” along with the remarks, i.e. “Refund of IGST paid on export of goods (Refund not processed by ICEGATE)”.
  • The DGARM would also share with the jurisdictional officer the risk parameters on which the exporter was identified as risky, together with the system-generated refund claim in FORM GST RFD-01.
  • If the verification report has already been submitted by the jurisdictional CGST authorities to the DGARM, the details of the same shall also be shared with the proper jurisdictional officer, along with the system-generated refund claim in FORM GST RFD-01.
  • The portal is used for the transmission of such IGST refunds to the proper jurisdictional officers, withheld on account of the identification of the exporter as risky by DGARM.
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The instructions provide vital information regarding the manner of processing and sanction of the IGST refunds, which can help the exporter to have essential details about the procedure and facilitate such processing and sanction at the earliest without any hassles or delay.


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