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GST Refund process for Essential goods

08 August 2019

I have a milk processing plant for which I was released a term loan just 3 days before GST and the project cost escalated due to GST which was implemented on 1st July 2017. Due to this my tax component shot up in lakhs.

1. Can I take a refund of the GST paid for machinery purchase or any other recurring purchases?

2. My output is Packaged milk, curd, buttermilk, loose paneer etc for which there is no GST applicable as these are essential goods

3. What is the process for the refund Kindly help

Do let me know if any info is required

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3 Replies

Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 09 August 2019

1. In case of capital Goods, Yes you can claim ITC , but in term of rule 43 have to reverse the same in proportion to your Exempted Supply . (Means you cannot claim input in case where your Output supply is Exempted)

As per Section 54 of CGST the condition prescribed to take refund & in your case you cannot claim refund .

Note : Claim ITC on inward supply & reverse it on monthly basis in proportion to your Exempted outward supply.

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debora M (BUSINESS DEVELOPMENT MANAGER) (1697 Points)
Replied 09 August 2019

Situations where Refund can be Claimed under GST

A suitable refund mechanism is essential for effective tax administration. When the taxes are paid in excess than assessed either erroneously or mistakenly, refund can be claimed under GST. Few scenarios are given below:

Refund of pre-deposit
Excess payment of GST because of an error in either calculation or submission
Refund of CGST and SGST paid by considering the supply in the course of inter-state transaction
Refund due to issuance of refund vouchers for pre-paid taxes against which goods and/or services haven’t been supplied
Accumulation of ITC caused by output being tax exempt or nil-rated
Dealer Exports (including deemed export) goods/services under claim of rebate or Refund
Refund of tax for International Tourists paid on goods within the country and carried to overseas on their departure from India
Supplies to developers and units in special economic zones
Finalisation of provisional assessment
Refund of taxes when embassies make purchases
Refund arising from order, judgment, direction or decree of the Appellate Tribunal, Appellate Authority or any court of law
Refund of tax paid on inward supplies made by Embassies or UN bodies

How to Claim Refund under GST?

The refund application has to be electronically submitted in Form RFD 01 within 2 years from relevant date. The refund application form must be certified by a Chartered Accountant / Cost Accountant, if the amount of refund exceeds Rs 2 lakhs.

Documents Required

The below is the list of standard documents to be filed along with refund claim by applicants making a claim:

For each claim, the primary document that has to be submitted is a statement of relevant invoices relating to the claim.
If the refund is made on account of export of services, not including the statement of invoices, the relevant bank realisation certificates verifying receipt of payment in overseas currency should also be furnished.
In case a claim is made by the supplier to the Special Economic Zones (SEZ) unit, the authorised officer will have to make an endorsement verifying the receipt of such commodities or services in the SEZ and submit the same along with the other documents.
Moreover, the SEZ unit will also have to provide a declaration stating that ITC of the tax paid by the supplier has not been availed.