The Directorate of Commercial Taxes, West Bengal on September 11th 2024 issued the notification regarding the Mechanism for refund of additional Integrated Tax (IGST) paid on account of upward revision in price of the goods subsequent to exports.
The Need for a Refund Mechanism
Exporters often face situations where the price of goods needs to be revised upward after the goods have been shipped. This can occur due to various factors, such as contractual obligations or fluctuations linked to international price indices. In such instances, exporters are required to pay additional IGST, but until now, there was no established mechanism to claim refunds for this extra tax paid.
Recognizing this gap, representations from the trade and industry sectors prompted the Directorate to introduce a formal process, ensuring that exporters can reclaim the additional tax burden efficiently.
Key Highlights of the New Refund Procedure
1. Filing a Refund Claim
Exporters are now required to file for refunds electronically using FORM GST RFD-01 on the common portal. Here’s how it works:
- Select the Right Category: Until a specific category for this refund type is implemented, exporters should choose “Any other” when submitting their application and include the remarks:
“Refund of additional IGST paid on account of increase in price subsequent to export of goods.”
2. Required Documentation
To support their refund claim, exporters need to submit the following documents:
- Shipping Bill or Bill of Exports: Proof of the export transaction.
- Original Invoices: The initial sales invoices related to the exported goods.
- Contractual Documents: Any contracts or documents that necessitate the price revision.
- Debit Notes/Supplementary Invoices: These should reflect the adjustments made to the original price.
- Proof of Payment: Documentation that shows the payment of additional IGST along with any applicable interest.
- Foreign Exchange Receipts (FIRC): Evidence of remittance received post-price revision.
- Accountant’s Certificate: A certificate from a practicing chartered or cost accountant verifying that the additional remittance is indeed due to the price adjustment.
- Statements 9A and 9B of FORM GST RFD-01: Specific statements required for the refund process.
3. Processing the Claims
Once the refund application is submitted, it will be processed by the jurisdictional GST officer based on the submitted documentation. The GST Network (GSTN) will assist by providing validated details of shipping bills and the amount of IGST refunds sanctioned to facilitate a smoother processing experience.
4. Minimum Refund Amount
It’s essential for exporters to note that any refund claim below ₹1,000 will not be processed. This stipulation ensures that the refund process remains efficient and focused on significant claims.
5. Time Limits for Filing Claims
Exporters must file their claims within two years from the relevant date outlined in the WBGST Act. This period allows exporters adequate time to submit their applications while ensuring timely processing.
6. Verification Process
The proper officer will verify that the exporter has accurately reported the export invoice and debit note in their outward supply statements (FORM GSTR-1). They will also check that the additional IGST has been duly paid. Claims will be sanctioned only if they meet all eligibility criteria.
7. Downward Price Revisions
In cases where there is a downward revision in prices, exporters who initially paid IGST must deposit back the excess refund received, along with applicable interest. This ensures compliance and maintains the integrity of the tax system.
The introduction of this refund mechanism for additional IGST paid due to price revisions marks a significant step in addressing the challenges faced by exporters in West Bengal. By streamlining the process and providing clear guidelines, the Directorate of Commercial Taxes aims to ease the tax burden on exporters, fostering a more favorable environment for trade.
