GST Circular No. 175/07/2022-GST: Refund of Unutilized ITC on Export of Electricity

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GST Circular No. 175/07/2022-GST: Refund of Unutilized ITC on Export of Electricity

<h3>GST Circular No. 175/07/2022-GST: Refund of Unutilized ITC on Export of Electricity</h3>The Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 175/07/2022-GST on 6th July 2022, addressing the challenges faced by power generation companies in claiming refunds of unutilized Input Tax Credit (ITC) for electricity exports.Since electricity is classified as "goods" under GST, exporters were facing difficulties in claiming refunds due to the absence of a Shipping Bill/Bill of Export, which is normally required under Rule 89 of CGST Rules, 2017. This circular introduces a new procedure to streamline the refund process.<hr><h2>Key Highlights & Clarifications</h2><h3>1. Filing Refund Claims for Electricity Exports</h3>✔ New Refund Category: Until the GST portal is updated, power generators must file refund applications under the "Any Other" category in FORM GST RFD-01. ✔ New Statement 3B: Instead of Statement 3, exporters must upload Statement 3B containing export invoices, energy exported, and tariff per unit. ✔ Supporting Documents Required:<ul><li>Statement of Scheduled Energy Exported issued by Regional Power Committee (RPC) Secretariat.</li><li>Power Purchase Agreement (PPA) specifying tariff per unit.</li><li>Statement 3A detailing refund calculations.</li></ul><hr><h3>2. Relevant Date for Filing Refund</h3>✔ Since electricity is exported continuously via transmission lines, the exact date of export is difficult to determine. ✔ The last date of the month in which electricity was exported, as recorded in the Regional Energy Account (REA) issued by the RPC Secretariat, will be considered the "relevant date" for filing a refund under Section 54 of the CGST Act, 2017. ✔ Time Limit: Refund applications must be filed within two years from the relevant date.<hr><h3>3. Refund Calculation Formula</h3>As per Rule 89(4) of CGST Rules, the refund amount for unutilized ITC is calculated as:Refund Amount=(Turnover of zero-rated supply of goods/services)×Net ITCAdjusted Total Turnover\text{Refund Amount} = \left( \text{Turnover of zero-rated supply of goods/services} \right) \times \frac{\text{Net ITC}}{\text{Adjusted Total Turnover}}✔ The export turnover of electricity will be calculated as:Energy Exported×Tariff per Unit\text{Energy Exported} \times \text{Tariff per Unit}✔ The lower value between the Scheduled Energy Exported (as per REA) and Invoice Quantity will be considered to avoid discrepancies. ✔ Domestic electricity sales are excluded from the adjusted total turnover, as electricity is exempt from GST.<hr><h3>4. Refund Processing by GST Officers</h3>✔ GST officers will verify the completeness and accuracy of refund applications. ✔ If the application is eligible, the officer will request the applicant to debit the refund amount from their Electronic Credit Ledger (ECL) using FORM GST DRC-03. ✔ After verification, the officer will:<ul><li>Issue a refund order in FORM GST RFD-06.</li><li>Process the payment through FORM GST RFD-05.</li></ul><hr><h2>Impact on Power Generation Companies</h2><h3>✅ Benefits of This Circular</h3>✔ Simplifies refund claims for electricity exporters who previously struggled due to lack of shipping bills. ✔ Ensures timely refund processing by providing clear documentation and a defined procedure. ✔ Eliminates refund calculation confusion by introducing Statement 3B and REA-based turnover valuation.<h3>❌ Key Compliance Considerations</h3>❌ Power generators must maintain accurate export data and agreements to avoid refund rejections. ❌ Delays in uploading REA reports can impact refund timelines. ❌ Any difference in export quantity between invoices and REA may reduce refund eligibility.<hr><a href="https://cms.plasament.com/storage/cir-175-07-2022-cgst.pdf">cir-175-07-2022-cgst</a>

GST Circular No. 175/07/2022-GST: Refund of Unutilized ITC on Export of Electricity

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