Page 32 - GSTL_16th July 2020_Vol. 38_Part 3

J74 GST LAW TIMES [ Vol. 38

A POSSIBLE REMEDY TO AMENDMENT OF RULE 96(10)

By
CA Venkat Prasad P. and CA Lakshman K.

Exporters have generally preferred to pay IGST on their exports and seek
their refund after exportation instead of availing. However a large segment of
exporters comprising of EOUs Merchant Exporters, deemed exporters and
Advance Authorization holders, are denied this benefit and are made to adopt
the alternative procedure which is less beneficial. The issue is analyzed herein.
Section 16 of IGST Act, 2017 entitles exporters to claim refund under ei-
ther of the two options :
(1) Export without payment of IGST under bond or Letter of Undertak-
ing (LUT) and claim refund of unutilized Input Tax Credit (ITC) or
(2) Export with payment of IGST and claim refund of such IGST paid.
The 2nd option is more viable and beneficial since the former option comes with
certain restrictions and limitations viz.,
• ITC on capital goods is not refundable.
• Transitional ITC is not refundable.
• Refund is formula driven which sometimes do not allow the com-
plete refund.
• Time consuming procedure is involved in claiming refund whereas
1st option involves the automatic processing of the refund once the
data of Shipping Bill & GST returns matches.
The exercise of the aforesaid options was left to the exporters. However, in the
month of October, 2017, the Government while restoring the tax-free procure-
ments, for the EOU’s, under Advance authorization/EPCG etc., denied [Rule
96(10) of CGST Rules, 2017 as amended vide Notification No. 3/2018-C.T., dated
23-1-2018 (w.e.f. 23-10-2017) and Notification No. 39/2018-C.T., dated 4-9-2018
(w.e.f. 23-10-2017)] the second option for such exporters. That is to say, exporters
who avail of GST free procurements are not eligible for option of making exports
with payment of IGST thereby such exporters are left with only one option; that of
making of exports under LUT and claiming refund of unutilized ITC. Such export-
ers include :-
(a) EOU’s importing the goods without payment of Customs duty
(BCD) & IGST vide Notification No. 78/2017-Cus., dated 13-10-2017
as amended [Exception is given to receipt of goods under EPCG
scheme];
(b) Imports under Advance Authorization holders without payment of
Customs duty (BCD) & IGST vide Notification No. 79/2017-Cus.,
dated 13-10-2017 as amended [Exception is given to receipt of goods
under EPCG scheme];
(c) Persons availing the benefit of deemed exports vide Notification
No. 48/2017-C.T., dated 18-10-2017 as amended [Exception is given
to receipt of goods under EPCG scheme] which exempts payment of
Customs duty (BCD) & IGST when procured domestically.
GST LAW TIMES  16th July 2020  32