Important Keyword: F. No. CBIC-20001/6/2024-GST, Circular No. 233/27/2024-GST, Section 168(1) CGST Act 2017, Notification No. 16/2020-CT.
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F. No. CBIC-20001/6/2024-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs GST Policy Wing
***
New Delhi, dated the 10th September, 2024
Circular No. 233/27/2024 - GST: Clarification regarding regularization of refund of IGST availed in contravention of rule 96(10) of CGST Rules, 2017, in cases where the exporters had imported certain inputs without payment of integrated taxes and compensation cess.
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners of Central Tax and Central Tax (Audit) (All)
The Principal Directors General / Directors General (All) Madam/Sir,
Subject: Clarification regarding regularization of refund of IGST availed in contravention of rule 96(10) of CGST Rules, 2017, in cases where the exporters had imported certain inputs without payment of integrated taxes and compensation cess - regarding.
Sub-rule (10) of rule 96 of Central Goods and Services Tax Rules, 2017 (hereinafter referred to as “CGST Rules”) provides for a bar on availment of the refund of integrated tax (IGST) paid on export of goods or services, if benefits of certain concessional/exemption notifications, as specified in the said sub-rule, have been availed on inputs/raw materials imported or procured domestically. In this regard, references have been received from the field formations and trade/ industry wherein clarification has been sought on whether refund of integrated tax paid on exports of goods by a registered person can be regularized in a case where the registered person had initially imported inputs without payment of integrated tax and compensation cess,
by availing the benefits under Notification No. 78/2017-Customs dated 13.10.2017 or Notification No. 79/2017-Customs dated 13.10.2017, but subsequently, at a later date, the said person has either paid the IGST and compensation cess, along with interest, on such imported inputs or is now willing to pay such IGST and compensation cess, along with interest.
- The issue has been examined and in order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the following:
- Vide Notification No. 16/2020-CT dated 23.03.2020, an Explanation was inserted in sub-rule (10) of rule 96 of CGST Rules retrospectively with effect from 23.10.2017, which reads as follows:
“Explanation. - For the purpose of this sub-rule, the benefit of the notifications mentioned therein shall not be considered to have been availed only where the registered person has paid Integrated Goods and Services Tax and Compensation Cess on inputs and has availed exemption of only Basic Customs Duty (BCD) under the said notifications.”
- A bare perusal of the said Explanation, which was inserted with retrospective effect, reveals that in cases where the benefits of these exemption notifications have not been availed in respect of IGST and compensation cess, it shall be deemed that benefit of the said notifications has not been availed for the purpose of sub-rule (10) of rule 96 of CGST Rules. Therefore, extension of logic given in the said Explanation may lead to a view that in cases where inputs were initially imported without payment of integrated tax and compensation cess but subsequently, IGST and compensation cess on such imported inputs is paid at a later date, along with interest, then in such cases, it can be considered that the benefits of notifications mentioned in clause (b) of sub-rule (10) of rule 96 of CGST Rules have not been availed for the purpose of said sub-rule. Accordingly, refund of IGST claimed on exports made with payment of Integrated tax in such cases may not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules.
2.3. In view of the above, it is clarified that where the inputs were initially imported without payment of integrated tax and compensation cess by availing benefits under Notification No. 78/2017-Customs dated 13.10.2017 or Notification No. 79/2017-Customs dated 13.10.2017, but subsequently, IGST and compensation cess on such imported inputs are paid at a later date, along with interest, and the Bill of Entry in respect of the import of the said inputs is got reassessed through the jurisdictional Customs authorities to this effect, then the IGST, paid on exports of goods, refunded to the said exporter shall not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules.
- It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
- Difficulty, if any, in implementation of the above instructions may please be brought to the notice of the Board. Hindi version would follow.
(Sanjay Mangal)
Principal Commissioner (GST)
📚 Frequently Asked Questions (FAQs): Circular No. 233/27/2024 - GST
Q1. What is Circular 233/27/2024 - GST?
Answer: It clarifies the regularization of IGST refunds claimed on exports where imported inputs were initially exempt from IGST and Compensation Cess.
The circular provides a mechanism to regularize such refunds if the importer later pays the exempted taxes and interest.
Q2. Which exporters can benefit from this circular?
Answer: Exporters who imported inputs under Notification No. 78/2017-Customs or 79/2017-Customs and later claimed IGST refunds on exports may benefit.
Q3. Does the circular automatically validate all refunds?
Answer: No.
The exporter must satisfy prescribed conditions, including payment of IGST, Compensation Cess, interest, and Bill of Entry reassessment.
Q4. Is payment of interest mandatory?
Answer: Yes.
The circular specifically refers to payment of IGST and Compensation Cess along with applicable interest.
Q5. Is reassessment of Bill of Entry compulsory?
Answer: Yes.
The circular expressly requires reassessment through jurisdictional Customs authorities.
Q6. Does the circular apply to future imports?
Answer: The circular mainly addresses regularization of existing cases where disputes have arisen regarding earlier refund claims.
Q7. What is the significance of Notification No. 16/2020?
Answer: It inserted a retrospective Explanation into Rule 96(10), which forms the legal basis of this clarification.
Q8. Can refund already received be protected?
Answer: Yes.
If conditions prescribed in the circular are satisfied, the refund may not be treated as being in contravention of Rule 96(10).
Q9. Does this circular apply to services exports?
Answer: The clarification primarily discusses export of goods and imported inputs. Exporters should evaluate applicability based on specific facts.
Q10. Is Compensation Cess payment mandatory even if IGST is paid?
Answer: Yes.
Where applicable, both IGST and Compensation Cess must be paid.
Q11. Does this circular override Rule 96(10)?
Answer: No.
It merely explains how Rule 96(10) should be interpreted when exempted taxes are subsequently paid.
Q12. Can taxpayers use this circular in ongoing litigation?
Answer: Yes.
Where facts match the clarification, taxpayers may rely upon the circular in pending proceedings.
Download PDF: Circular No. 233/27/2024 - GST
More Information: https://taxinformation.cbic.gov.in/
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