GST Updates

Circular No. 110-CGST Dated 3rd October 2019-Arbitrariness in Implementation of Law comes to the Fore and why such procedures like “chronological filing” of refund applications are exposing GST to whimsical implementation

Circular No. 110-CGST Dated 3rd October 2019-Arbitrariness in Implementation of Law comes to the Fore and why such procedures like “chronological filing” of refund applications are exposing GST to whimsical implementation

CA Arpit Haldia 

  1. For the Starting

Section 54 read with provisions of Chapter X of CGST Rules, 2017 firstly nowhere provides that all refund applications should be filed in a chronological order and secondly nowhere imposes a restriction that a fresh refund application for a given period cannot be submitted again.


  1. Process for Chronological submission of Application implemented from December 2018 /January 2019

This compulsion of submission of refund application in chronological order was implemented unilaterally only for the refund applications filed after the month of December 2018/January 2019 (be it for any period).


  1. Reason behind such chronological submission of refund application

Now, CBEC has come up with Circular No. 110 Dated 3rd October 2019 which provides for Eligibility to file a refund application in FORM GST RFD-01 for a period and category under which a NIL refund application has already been filed. Interestingly, what the circular throws up is firstly the reason why process for chronological filing of refund application has been implemented. Para 2 of the Circular provides that

“Whenever a registered person proceeds to claim refund in FORM GST RFD-01A/RFD-01 under a category for a particular period on the common portal, the system pops up a message box asking whether he wants to apply for ‘NIL’ refund for the selected period. This is to ensure that all refund applications under a particular category are filed chronologically.”

So, the circular quite interestingly does not refer any provision of CGST Act, 2017 read with rules made thereunder for the reason behind chronological submission of the refund application but only a simple statement that they wanted to ensure “all refund applications for a particular category are filed chronologically.”  Had this ben under any provision of the law, some or other provision would have been mentioned in the circular and it shows that somewhere down the line, GST is being administered both by the law and outside the law as well.


  1. What has this resulted in

Such overhasty “chronological submission of refund application” resulted is a hardship on the assessee. Take an Example, a person has to file refund application for July and August 2018. The assessee does not intend to file refund application for July 2018 due to any of the reasons i.e. Export Proof not available, Suppliers have not filed their return, Documents not ready but want to file refund application for August 2018 or subsequent periods etc. In such case such “chronological submission of refund application” forces the taxpayer to file a Nil refund application for July -2018 and file Refund Application for Aug-2018 or wait for the documents to be completed for July 2018 and until then hold all the further refund applications. Refunds is at first an option to be exercised by the tax payer within the given time limit. Taxpayer cannot be forced to exercise before the time limit resulting in curtailment of time limit.


  1. Does Circular No. 110/29-CGST dated 3rd October 2019 addresses the Concerns of the Taxpayers:

Circular No. 110 Dated 3rd October 2019 does not address the concerns of most of the taxpayers and falls flat and would utmost have a limited applicability. The reason why it is said so is that the circular provides for two conditions for being eligible to fall in within the purview:


Condition-1:-The registered person must have filed a NIL refund claim in FORM GST RFD-01A/RFD-01 for a certain period under a particular category; and

Condition-2:-No refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.


Now looking at the both the conditions, it can be noticed that the first condition is an obvious condition (Why this was listed as a condition in the circular is itself a big question when the circular itself is covering that situation only).

It’s the second condition which raises serious question over the fact that whether the circular has been able to address the real issue or has missed the target big time. The second condition provides that no refund claims in FORM GST RFD-01A/RFD-01 must have been filed by the registered person under the same category for any subsequent period.

So, a person who has filed a nil refund application for July 2018 and has filed refund application for Aug-2018 would not be able to claim benefit under this circular since he has filed refund application for subsequent periods. Whether the persons drafting the circular intended that the taxpayer should have believed firstly that such a circular is coming and secondly should have waited till this circular for submission of refund applications for all subsequent periods. Taxpayers are being considered as super humans in GST wherein they are not allowed to commit any errors or omission and the revenue has all the powers to exercise “in the public interest”.


  1. Circular raises more questions than providing Answers-In the above backdrop there are some very serious which raise their heads


a) Does the provisions of CGST Act read with rules made thereunder imposes any condition of chronological filing of refund application.


b) If No, then whether GSTN can implement such condition as per their own whims and not only curb the right of the taxpayers but also hamper their regular running of business by way of blockage of working capital.


c) Whether forcing a person to file Nil refund application, does not tantamount to curtailment of period provided under section 54 to file refund application just because “to ensure chronological filing of refund application”.


d) If a Taxpayer has filed a Nil refund application due to certain contingencies or inadvertence on account of the restriction imposed by GSTN for “chronological filing of refund application”, whether law restricts resubmission of refund application. If law restricted resubmission of refund application then whether Board has the power to allow resubmission of claim by way of Circular and if law does not impose any restriction, why resubmission can be allowed subject to conditions. This Circular is no Removal of Difficulty order which can amend the provisions of law or rules.


e) Further, if law does not imposes any condition of “chronological filing of refund application” or on “resubmission of refund application”, whether board can unilaterally impose restrictions in allowing a taxpayer to resubmit his claim like they have inserted condition-2 as narrated above. Isn’t restricting the rights of the taxpayers is going beyond the law. The board only has the power to issue orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of CGST Act but does not have the power to imposes restrictions on Taxpayers.


f) If a Taxpayer is not able to submit refund application for say July 2018 due to certain contingencies, and is not able to submit future refund applications


  • Isn’t it a denial of right of the taxpayer to claim refund for the subsequent months until the previous applications are submitted.


  • Isn’t Forcing the Taxpayer to file “Nil” refund application, an encroachment of the right of the taxpayer and the allowed time limit wherein Section 54 provides him a time period of two years without any sequence of submission of refund application


  • Claim of refund is not Mandatory for a Taxpayer, therefore why force him to file all refund applications for all previous periods before filing the refund application for current period.


  • Refunds are no returns which are an obligation casted under the law on the taxpayers and neither there is a provision in Section 54 alike Section 39(8) which provides that every taxpayer shall furnish a return for every tax period whether or not any supplies of goods or services or both have been made during such tax period. Further refund application are no “Class X” Examinations wherein Exams upto Class I to Class IX have to be cleared.Further, say for E.g. is the GSTN expecting a person filing refund claim for the first time for July 2029 for the period June 2029, although he was registered since July 2017 in GST but started exporting in June 2029 only to file all refund applications from July 2017 to May 2029 so as to file refund for June 2029.

Concluding: Circular needs revisit and if imposition of condition like the ones imposed in the circular for restricting eligibility to claim refund are not challenged initially, days are not far when we would see certain more creative and inventive conditions well known to the ones who drafted them. Procedures can be implemented for administration of law but if the same results in curtailment of right, then they are no good and illegal.

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