Key Highlights of Circular No. 79/53/2018

2025-03-03 09:09:09 02March

02March

Key Highlights of Circular No. 79/53/2018 - GST

<h2>1. Electronic Submission of Refund Applications</h2>? Earlier, refund applications (FORM GST RFD-01A) had to be physically submitted to tax offices, causing delays. ? Now, all supporting documents, invoices, and undertakings must be uploaded electronically on the GST portal. ? Once the Application Reference Number (ARN) is generated, the refund application is deemed filed, and the 15-day period for acknowledgment begins. ? Exception: If the taxpayer chooses to submit manually or is yet to be assigned a jurisdictional tax officer, they can submit the application physically.<hr><h2>2. Refund of Accumulated ITC in Case of Inverted Duty Structure</h2>? Issue: Some tax officers wrongly denied refund claims by excluding ITC on inputs taxed at equal or lower rates than the output supply. ? Clarification: ITC refund is available for all inputs used, regardless of their tax rate. ? Example Calculation:<ul><li>Input A (5% GST) + Input B (18% GST) → Final Product Y (12% GST).</li><li>Refund of accumulated ITC is calculated based on all inputs used, not just the ones with a higher tax rate.</li></ul><hr><h2>3. Faster Disbursal of Refunds & Interest on Delays</h2>? Refunds must be processed within 60 days from the date of ARN generation. ? If refunds are delayed, interest at 6% per annum must be paid to the taxpayer. ? Tax officers are advised to issue final sanction orders within 45 days to ensure timely disbursal.<hr><h2>4. Handling of Pending Refund Applications</h2>? Many refund applications were generated on the GST portal but not physically submitted to tax offices. ? Guidelines for processing such cases:<ul><li>Claims below ₹1,000 → Automatically rejected and ITC re-credited.</li><li>Claims above ₹1,000 → Taxpayer gets 15 days to submit physically, else the application will be summarily rejected.</li></ul><hr><h2>5. Refund of Compensation Cess for Exporters</h2>? Exporters using inputs subject to Compensation Cess (e.g., coal) but exporting goods exempt from the cess (e.g., aluminum) are eligible for a refund of the cess paid. ? Refund eligibility is calculated based on past refund claims and must align with earlier claims on CGST/IGST/SGST.<hr><h2>6. Refund of ITC on Capital Goods & Input Services</h2>? Refund of ITC under the inverted duty structure is allowed only on inputs, NOT on input services or capital goods. ? This clarification aligns CGST Rules with the CGST Act, ensuring refunds apply only to goods used in manufacturing/output supplies.<hr><h2>7. ITC on Stores, Spares, Packing Materials, and Other Inputs</h2>? Some tax officers wrongly denied ITC on packing materials, spares, and stationery. ? Clarification: All inputs used for business purposes are eligible for ITC unless restricted under Section 17(5) of CGST Act.<hr><h2>8. ITC on Invoices from a Previous Tax Period</h2>? Some officers excluded ITC from invoices of a previous month that were claimed in a later return. ? Clarification: ITC is considered "availed" only when declared in FORM GSTR-3B, regardless of when the invoice was issued.<hr><h2>9. Trade Notices & Implementation</h2>? CBIC has directed tax authorities to issue trade notices to inform businesses about these clarifications. ? Any issues in implementation should be reported to CBIC.<a href="https://cms.plasament.com/storage/shubham-pathak/circular-no-79.pdf">circular-no-79</a>