Page 47 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] REFUND AMOUNT CURTAILED BY PROCEDURES J73
form not prescribed or without documents” this rationale was confirmed in series of
decisions rendered under the erstwhile Central Excise law.
Exporter of goods on payment of IGST were given seamless and auto-
matic refund, however if there was a mis-match between GSTR-1/GSTR-3B and
shipping bill, then the refund gets stuck. In such cases, the exporter had an op-
tion to file a refund of excess payment of tax and get the refund which was stuck.
Now with the insertion of Rule 86(4A), if the claim for refund filed as excess
payment of tax or wrong payment of tax and if the amount of excess/wrong
payment was made as per the above explained scenario then refund will be the
re-credit in electronic credit register, in terms of Rule 86(4A), since the excess or
wrong payment was paid through the credit, therefore the same will be re-
credited in electronic credit register. Such an afterthought amendments, are tak-
ing away the means of assessee claiming refund and resulting in shrinking of
refund dues to stringent procedures, ignoring the objectives of the refund claim.
Inverted duty structure refund : Rule 89(5a), allows refund only on in-
puts, though no proper justification is provided as to why the input service and
capital goods credit refund was not allowed under inverted duty structure re-
fund mechanism. Input service component constitutes significant portion vary-
ing in percentage from industry to industry, in case of tractor industry and agar-
bathi industry it would be around 15-20% per month. In mining and mineral in-
dustry, input service component constitute of more than 50%, wherein most of
equipments/machineries are taken on rental basis, which has resulted these in-
dustries merely carrying these credits in its books without being in a position to
encash these input service credits in the form of refund. Which automatically
cascades into higher input cost. Paper writer feels that Section 54(3)(ii) should
allow refund on input service also, in order to meet the intention of the law.
Some of the issues cited above are confirmed through circular, though
not said so in the law. Supreme Court in case of CCE v. Ratan Melting & Wire in-
dustries, 2008 (12) S.T.R. 416 (S.C.), has held that circular which is contrary to the
statutory provisions has really no existence in law”.
Considering the intention of the law, GST law is being driven by proce-
dures, making life difficult for the assessees. Keeping the objective of ease of do-
ing business and easy compliance mechanism. The issues cited in the article
might have to be re-visited by the GST Council, necessary action from GST
Council will be appreciated by the industry in these tough times. If appropriate
action are taken on the points suggested in this article will help the industries in
reducing the cost between 10-15%.

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GST LAW TIMES  21st May 2020  47