IGST Refund: CBEC introduces Alternative Mechanism to Rectify Invoice Mismatch

Source: http://www.taxscan.in/igst-refund-cbec-introduces-alternative-mechanism-rectify-invoice-mismatch/18253/     Feb 26, 2018

In a great relief to tax payers,the Central Board of Excise and Customs (CBEC) has introduced an alternativemechanism enabling the exporters to rectify the mistakes in cases where IGSTrefund is stuck due to invoice mismatch.


        The circular provided the followingpre-requisites and precautions that need to be taken for successful processingof refund claims


  • ·     Exportershave to file GSTR 3B with taxable value for export and IGST paid againstexports indicated in appropriate fields.

  • ·    Exportershave to file GSTR 1 or Table 6A for the exports made with correct details suchas Invoice number, Taxable value, IGST paid, Shipping Bill number, ShippingDate and Port Code. Large number of exporters have filed incomplete GSTR 1 orTable 6A where shipping bill number or date or port code are missing. Theserecords are not processed / forwarded to Customs by GSTN. E-mails have beensent to exporters asking them to correct their records through amendmentprocess of GSTR 1 i.e through Table 9 of GSTR 1 of the following month.

  • ·     Theaggregate IGST paid amount claimed in GSTR 1 or Table 6A should not be greaterthan the IGST paid amount indicated in Table 3.1(b) of GSTR 3B of thecorresponding month. This check is put in the GSTN system to ensure that therefund claimed is not more than the IGST paid by the exporter. Analysis of GSTNreturn data indicates that this condition has failed in a large number ofcases, consequently, the information filed by exporters is not forwarded toCustoms by GSTN. In these cases also, e-mails have been sent to exportersasking them to correct their records through amendment process of GSTR 1 i.e.through Table 9 of GSTR 1 of the following month.

  • ·     Theanalysis of data further indicates that only about 32% records of GSTR 1 /Table 6A have been transmitted from GSTN to Customs. In other words, a majorityof refund claims are held up either due to insufficient information or lack ofdue diligence on the part of exporter while filing GST returns.

  • ·     Exportersmay be advised to use Table 9 of GSTR 1 of the following month to amend therecords of previous month so as to take care of issues mentioned in paras (ii)and (iii) above. In cases where exporters have already filed informationthrough Table 9 of GSTR 1, the said information is being validated by GSTN. Thevalidated information is expected to be forwarded by GSTN to Customs bymid-March 2018 for further processing.

  • ·     Therecords (i.e GSTR 1 or Table 6A) which have been forwarded by GSTN to Customsafter validations mentioned at (ii) and (iii) above are processed by theCustoms EDI system. In cases where the information forwarded by GSTN tallieswith the information furnished in Shipping bills, refunds are automaticallysanctioned by Customs EDI system. As mentioned earlier, till date about Rs.4000 Crore has been sanctioned as refund of IGST paid.

  • ·     However,there are many instances where refunds are held up on Customs EDI system due tocertain errors which have been clearly brought out in the Circular No 42/2017-Customs. The major errors that are committed by the exporters are (a) incorrectShipping bill numbers in GSTR 1 (b) GSTIN declared in the shipping bill doesnot match with the GSTIN used to file the corresponding GST Returns (c) themost common error hampering refund is due to mismatch of invoice number,taxable value and IGST paid in the Shipping Bill vis-à-vis the same detailsmentioned in GSTR 1 / Table 6A which is the most common error hampering refund.Another reason attributable to carriers is the non-filing or incorrect filingof electronic Export General Manifest (EGM).

  • ·      Exportersmay be advised to track the refund status and errors pertaining to theirshipping bills on the ICEGATE website.

  • The analysis of Customs data indicates that while most of the errorsmentioned in para (vi) above are decreasing, the error mentioned at (c) in para(vii) is most prevalent. The error mentioned at (c) in para (vii) is aboutinvoice mis-match. This error is because of the fact that exporters are usingtwo sets of invoices, one invoice for GST and another invoice for Customs whichis resulting in mismatch of invoice numbers, including mis-match in taxablevalue and IGST paid in those invoices. It is once again reiterated thatexporters may be advised to take due care to ensure that the details of invoicesuch as invoice number, taxable value and IGST paid mentioned in GSTR 1 andshipping bill match with each other and the invoice issued is compliant withthe GST Invoice Rules, 2017. This procedure is available only for ShippingBills filed till 31st December 2017.