Blog on Circular No. 168/24/2021-GST: Refund Claims for Taxpayers in Erstwhile UT of Daman & Diu

2025-03-03 09:44:30 02March

02March

Blog on Circular No. 168/24/2021-GST: Refund Claims for Taxpayers in Erstwhile UT of Daman & Diu

<h4>Introduction</h4>The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 168/24/2021-GST on December 30, 2021, to address refund-related challenges for taxpayers registered in the erstwhile Union Territory (UT) of Daman & Diu. Following the merger of Daman & Diu with Dadra & Nagar Haveli on August 1, 2020, businesses faced difficulties in filing GST refund claims for the period before the merger. This circular provides a mechanism to resolve these issues and facilitate refund applications.<hr><h3>Key Highlights of the Circular</h3><h4>1. Background: Transfer of ITC to New GSTIN</h4><ul><li>After the merger, taxpayers in Daman & Diu received new GSTINs with UT Code 26.</li><li>Input Tax Credit (ITC) was transferred from the old GSTIN to the new GSTIN:<ul><li>Reversed ITC balance from old GSTIN via FORM GSTR-3B.</li><li>Reclaimed the ITC in the new GSTIN via the first FORM GSTR-3B filing.</li></ul></li><li>Issue: Since ITC was transferred to the new GSTIN, businesses could not apply for refunds for zero-rated supplies and inverted duty structure refunds from the old GSTIN.</li></ul><h4>2. Refund Filing Process for Affected Taxpayers</h4>To enable affected businesses to claim refunds for pre-merger transactions, the CBIC outlined the following steps:✅ File Refund Under "Any Other" Category<ul><li>Refund applications must be submitted using the new GSTIN under the "Any Other" category on the GST portal.</li><li>In the Remarks column, applicants must specify the actual refund type. Example:<ul><li>For an export refund without tax payment, the remark should state: "Refund of unutilized ITC on account of export of goods/services without payment of tax for the period prior to the merger of Daman & Diu with Dadra & Nagar Haveli."</li></ul></li><li>Attach all supporting documents required for regular refund claims.</li></ul>✅ No Immediate ITC Debit Required<ul><li>Initially, taxpayers do not need to debit ITC from their electronic credit ledger while filing the refund claim.</li></ul>✅ Scrutiny & ITC Debit via FORM GST DRC-03<ul><li>The GST officer will review the application and determine the eligible refund amount.</li><li>If required, the officer will ask the taxpayer to debit ITC via FORM GST DRC-03 before processing the refund.</li></ul>✅ Refund Approval & Payment Process<ul><li>Once the ITC debit is confirmed, the officer will approve the refund using FORM GST RFD-06 and issue the payment order via FORM GST RFD-05.</li></ul>✅ Non-ITC Refunds Follow the Same Process<ul><li>Refund claims not requiring ITC debit (e.g., excess tax paid) can also be filed under "Any Other" with a proper remark.</li></ul><h4>3. Prohibited Actions</h4><ul><li>Taxpayers cannot file refunds under the old GSTIN if the claim requires ITC debit or re-credit to the electronic credit ledger.</li><li>All refund applications must be filed under the new GSTIN.<a href="https://cms.plasament.com/storage/nisha/circular-168-2021-gst.pdf">circular-168-2021-gst</a>  </li></ul>