Recipient of goods or services cannot file refund application under GST
Under the provisions of the GST law, refund application can be filed by the taxpayers only under the 3 specified scenarios. The Madras High Court has recently pronounced that a recipient of goods or services cannot file refund application with the government.
GST refund is allowed to those registered taxpayers who have paid more than their GST liability. By submitting a refund application in GST RFD-01 with the necessary details on the GST portal, taxpayers can claim the excess amount as refund and alleviate any financial burdens. This process Refunds plays a crucial role in maintaining a healthy cash flow and working capital, particularly for manufacturers and exporters who rely on timely refunds to meet their operational needs.
According to Section 54 of the CGST/SGST Act “Refund” includes (a) any balance amount in the electronic cash ledger so claimed in the returns, (b) any unutilized input tax credit in respect of (i) zero rated supplies made without payment of tax or, (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies) - inverted duty structure, (c) tax paid by specialized agency of United Nations or any Multilateral Financial Institution and Organization notified under the United Nations (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries on any inward supply.
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Get SupportIn a recent judgment, the Madras High Court in the matter of Norton Granites & Properties Private Ltd. v. Assistant Commissioner (ST), held that recipient of the goods or services cannot claim refund under GST law. The Court has clarified the scope of GST refund claims, dismissing a writ petition filed by the Petitioner against the Assistant Commissioner (ST). The Petitioner had claimed a GST refund for excess tax paid on construction services rendered by KG Foundation Private Limited, citing a lower GST rate of 5% instead of the actual rate of 18%. However, the Court ruled that the refund application must be filed by the registered service provider, KG Foundation, and not the recipient of the services, the Petitioner.
The Court's decision is based on the GST framework, which clearly states that the service provider is obligated to collect and file tax on a forward charge basis. This means that the recipient of the services does not have the legal standing to apply for a refund on the taxes filed by the service provider. The Court's ruling is a significant clarification for service providers and recipients alike, emphasizing the importance of adhering to the GST framework and the roles and responsibilities of each party involved.
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