Page 19 - GSTL_ 28th May 2020_Vol 36_Part 4

ADVANCE PAYMENT RETURNED TO
BUYER : TREATMENT OF GST PAID
THEREON
ADVANCE PAYMENT RETURNED TO BUYER : TREATMENT OF GST PAID THEREON
By
Ashish Bajaj
CHARTERED ACCOUNTANT

Recently the Government has issued a Circular
No. 137/07/2020-GST, dated 13 April, 2020 vide which
Government has clarified various issues. One of issue
clarified by the circular is reproduced below :-

Sr. Issue Clarification
No.
2 An advance is received by a In case GST is paid by the suppli-
supplier for a Service contract er on advances received for an
which got cancelled subse- event which got cancelled subse-
quently. The supplier has is- quently and for which no invoice
sued receipt voucher and paid has been issued in terms of sec-
the GST on such advance re- tion 31(2) of the CGST Act, he is
ceived. Whether he can claim required to issue a “refund
refund of tax paid on advance voucher” in terms of section
or he is required to adjust his 31(3)(e) of the CGST Act read with
tax liability in his returns? rule 51 of the CGST Rules.

The taxpayer can apply for refund
of GST paid on such advances by
filing FORM GST RFD-01 under
the category “Refund of excess
payment of tax”.

It is evident from the above that the circular is silent about the procedure for ad-
justing the tax liability (in respect of tax attributable to advance amount refunded)
through regular GST returns i.e. GSTR-3B. Now the following question arises for
consideration :-

GST LAW TIMES  28th May 2020  19