Revised Procedure of Refund Applications by ‘CSD’ with CBIC Clarifications

CBIC prescribes revised procedure for online filing and e-processing of refund claim applications in the case of Canteen Stores Department (CSD) from 10/07/2024.

On 28/06/2017, the Central Government notified and permitted the CSD under the Ministry of Defense to claim a refund of 50% of the central, integrated, and Union territory taxes paid on all inward supplies of goods. It may be noted that the refund is available for goods received by the CSD for subsequent supply to Unit Run Canteens or authorized customers. Similarly, the State Governments have also issued notifications allowing 50% refund of State tax paid by CSD on such inward supplies.

To expedite the processing of refund claims, the CBIC, under the authority granted by section 168(1) of the CGST Act, 2017 has outlined the specified procedure for filing and processing these claims.

CBIC has initially prescribed procedure for manual filing of refund claims vide Circular 60/34/2018 till the utility for online filing is developed. However, from 10/07/2024, the CBIC has prescribed the revised procedure including online filing of refund claims, in line with newly inserted CGST Rule 95B.

Accordingly, the provisions of the GST Circular 60/34/2018 shall continue to apply to all refund applications filed manually before implementation of CGST rule 93B from 10/07/2024 and before the new functionality is made available on the common portal. These manually filed applications shall continue to be processed manually as per the earlier circular.

Revised Procedure of Online CSD Refund Application Processing from 10/07/2024

To facilitate electronic filing of applications for refund by the CSD, a new functionality has been provided on the common portal. In this regard, CGST Rules have been amended vide Notification No. 12/2024-Central Tax dated 10.07.2024 to insert a new rule 95B and FORM GST RFD-10A.

In order to have uniformity in the implementation of the law across field formations, the CBIC, vide section 168(1) of the CGST Act, has issued a revised procedure for the electronic submission and processing of applications for refund by the CSD under section 55, superseding Circular 60/34/2018 dated 04.09.2018.

1. Filing of refund claim by CSD: The CSD shall apply for a refund of 50% of the applicable central, integrated and Union territory taxes paid on all inward supplies of goods received for further supply to its Unit Run Canteens or authorized customers. The application shall be filed electronically in FORM GST RFD-10A on the common portal and shall be processed electronically. The refund will be calculated based on the invoices of the inward supplies of goods received by the CSD.

The CSD shall apply for refunds with their respective jurisdictional Central or State tax authority quarterly, as per rule 95B of the CGST Rules. They are also allowed to club multiple quarters or financial years in one application. The only condition for getting the refunds is that goods were received from a registered person with a tax invoice and the supplier has filed his returns in FORM GSTR-1 and FORM GSTR-3B. The refund application shall contain an undertaking that the goods were received for further supply to Unit Run Canteens or other authorized customers and a declaration to the effect that no refund has previously been claimed in respect of the invoices concerned.

2. Relevant date for filing of refund: Section 54(2) of the CGST Act allows a CSD, as notified u/s 55, to apply for a refund of taxes paid on inward supplies of goods or services within two years from the last day of the quarter in which the supply was received. The CSD can claim refund of eligible central, integrated, and Union territory taxes during these two years.

3. Processing and sanction of the refund claim: The proper officer shall process the refund claim of CSD in the same manner as claims filed in FORM GST RFD-01 under rule 89 of the CGST Rules, including verification of the GSTIN details on the common portal for having filed all the required returns in FORM GSTR-1 and FORM GSTR-3B. The officer shall scrutinize the details in FORM RFD-10A, FORM GSTR-3B and FORM GSTR-2B, and verify that the invoices on which the refund is claimed have been furnished by the supplier in FORM GSTR-1 and that the supplier has filed their return in FORM GSTR-3B for the relevant tax period.

The officer will also ensure that the refund amount does not exceed 50% of the taxes paid on supplies received by the CSD. The CSD uploaded invoices shall be validated with FORM GSTR-2B, and only validated invoices will be allowed. System shall flag the invoices for which refund has already been claimed. Refund amount in FORM GST-RFD 10A will be auto-populated and editable only downwards. The officer shall also ensure that the ITC on inward supplies has been reversed as per Circular no. 170/02/2022-GST. The officer shall verify the application for completeness and eligibility and issue the order in FORM GST RFD-06 and upload detailed speaking order.

CBIC GST Circular 227/21/2024 dated 11/07/2024: Revised procedure of online filing and processing of refund applications by CSD in terms of new CGST Rule 95B

Existing Procedure of Manual CSD Refund Application Processing before 10/07/2024

1. Filing Application for Refund: The CSD is eligible to claim refunds on inward supplies of goods on an invoice basis, not accumulated input tax credit. Under rule 95 of the CGST Rules, 2017, the CSD has to claim the refunds on a quarterly basis. Till the online utility is developed, the claims shall be filed manually in FORM GST RFD-10A with the jurisdictional tax office along with undertaking of goods receipt, no prior refund claims, copies of valid returns filed in FORM GSTR-3B, copies of FORM GSTR-2A with attested invoices not reflected in FORM GSTR-2A and bank account details for refund credit.

2. Processing and sanction of the refund claim: On receipt of a complete refund application in FORM GST RFD-10A, an acknowledgement will be issued within 15 days. In case of deficiencies, the same shall be communicated through a deficiency memo in FORM GST RFD-03 within the same period. The proper officer will verify the GSTIN details and scrutiny of the forms and invoices. The amount of refund, being 50% of the taxes paid, shall be sanctioned or rejected in FORM GST RFD-06 and payment advice in FORM GST RFD-05. The details of sanctioned refund will be submitted manually in the PFMS system for release.

3. Refund Jurisdictions: It has been explained by the CBIC that the CSD will make applications for refunds with their jurisdictional Central or State tax authority. The payments of central and integrated taxes shall be made by the Central tax authority, while the payments of State and Union Territory taxes shall be made by the State or Union Territory tax authorities. The refund orders shall be communicated to the concerned counterpart tax authority within seven days for ensuring that the remaining refund amount is paid timely, in the manner as prescribed under Circular 24/24/2017 GST dated 21/12/2017.

CBIC GST Circular 60/34/2018 dated 04/09/2018: CBIC Clarification on Processing of refund applications of ‘Canteen Stores Department (CSD)’