Cancellation of agreement or contract for the supply of service refund to unregistered person [RULE 89(2)(KA), 188/20/2022-GST DT 27TH DEC 2017]
1. Who can make a claim for a refund under this?
An unregistered buyer may make a claim for a refund of the GST amount paid to the supplier following the cancellation or termination of a contract for the supply of services (and in cases where the time limit for the supplier’s adjustment by credit note has passed, as per Section 34(1) of the CGST Act 2017).
2. How such an unregistered buyer should submit a claim for a GST refund
Unregistered people can now take advantage of the common portal capabilities to get a temporary GST registration.
The unregistered person must register for a temporary GST account on the common portal using his PAN in order to submit a refund application.
The unregistered person must choose the same state or UT as his or her provider while doing so.
The unregistered individual would subsequently be compelled to submit to Aadhaar authentication in accordance with the conditions of rule 10B of the CGST Rules.
Additionally, the unregistered individual would need to input the information for the bank account he plans to use to receive the refund of the amount claimed.
Unregistered people can now take advantage of the common portal capabilities to get a temporary GST registration.
The unregistered person must register for a temporary GST account on the common portal using his PAN in order to submit a refund application. The unregistered person must choose the same state or UT as his or her provider while doing so.
The unregistered individual would subsequently be compelled to submit to Aadhaar authentication in accordance with the conditions of rule 10B of the CGST Rules. Additionally, the unregistered individual would need to input the information for the bank account he plans to use to receive the refund of the amount claimed.
3. What Form should be used to submit a refund application? & Which paperwork is necessary?
Apply for a refund in Form RFD 01 under “Refund for Unregistered Person” with the information requested in Statement 8 and the supporting documentation listed in the following paragraph.
Statement giving information on the bills (including the number, date, amount, tax paid, and payment information) for which a refund is being requested.
Copies of the invoices, evidence of payments made to the supplier, copies of any contracts or registered agreements entered into with the supplier for the provision of services, as appropriate, the supplier’s letter of cancellation or termination, and information on payments made to the supplier in exchange for cancellation or termination of such agreements, along with proof of such payments.
Certificate from the supplier stating that he has paid tax on the invoices for which the applicant is requesting a refund, that he has not issued a credit note to offset the tax amount on these invoices against his tax liability, and that he has not claimed and will not claim a refund of the tax amount on these invoices. Regarding bills issued by various vendors, separate refund applications must be submitted.
4. What is the deadline for requesting a refund?
Time frame for requesting a refund
5. What amount is eligible for a refund?
The total amount of tax declared on the invoices for which a refund is being requested cannot be exceeded by the amount of the refund requested.
Only the proportionate amount of tax involved in such amount paid back shall be refunded to the unregistered person in situations where the amount paid back by the supplier to the unregistered person upon cancellation/termination of agreement/contract for supply of services is less than the amount paid by such unregistered person to the supplier.
6. Refund is not permitted if – Unregistered persons may only file a refund claim in situations where the time period for the issuance of credit was still open at the time the agreement or contract for the supply of services was cancelled or terminated.
It should be noted that Section 34 of the CGST Act is already outdated. Refund applications cannot be submitted if such a term has not passed, and After reviewing the refund application, the proper authority must additionally submit a detailed speaking order in FORM GST RFD-06 with the refund sanction order.
