Notified the procedure for filing application of refund by the unregistered buyers

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Background:

Recently, the GST Council’s 48th meeting was held in Delhi on December 17, 2022 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman, in which it was recommended to prescribe the procedure for filing application of refund by the unregistered buyers in cases, where there is no procedure for claim of refund of tax borne by the unregistered buyers in cases where the contract/ agreement for supply of services, like construction of flat/house and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over.

The above-mentioned recommendation has been notified vide following notification:

Notification:

The CBIC vide Notification No. 26/2022 – (Central Tax) dated December 26, 2022 has issued ‘the Central Goods and Services Tax (Fifth Amendment) Rules, 2022’ to further amend the Central Goods and Services Tax, Rules, 2017 (“the CGST Rules”) in to order to align with recommendations of the 48th GST Council Meeting held on December 17, 2022, in a following manner:

  • In Rule 89 of the CGST Rules i.e. Application for refund of tax, interest, penalty, fees or any other amount:
    • Introduced Rule 89(2)(ka) in the CGST Rules, to prescribe that the refund application shall be accompanied by a statement containing the details of invoices, in respect of which refund is being claimed along with copy of such invoices, proof of making such payment to the supplier, the copy of agreement or registered agreement or contract, as applicable, entered with the supplier for supply of service, the letter issued by the supplier for cancellation or termination of agreement or contract for supply of service, details  of payment received from the supplier against cancellation or termination of such agreement along with proof thereof, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated.
    • Introduced Rule 89(2)(kb) in the CGST Rules, to prescribe that the refund application shall be accompanied by a certificate issued by the supplier to the effect that he has paid tax in respect of the invoices on which refund is being claimed by the applicant; that he has not adjusted the tax amount involved in these invoices against his  tax liability by issuing credit note; and also, that he has not claimed and will not claim refund of the amount of tax involved in respect of these invoices, in a case where the refund is claimed by an unregistered person where the agreement or contract for supply of service has been cancelled or terminated.
    • Inserted new proviso to Rule 89(2)(m) to provide that, a certificate is not required to be furnished in cases where refund is claimed by an unregistered person who has borne the incidence of tax
  • Amended FORM GST RFD-01 so as to allow the refund for unregistered persons.

The Notification can be accessed at: https://taxinformation.cbic.gov.in/view-pdf/1009584/ENG/Notifications

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