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Circular No. 188/20/2022-GST
F. No. CBIC-20001/2/2022 - GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
*****
New Delhi, Dated the 27
th
December, 2022
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Directors General / Directors General (All)
Madam/Sir,
Subject: Prescribing manner of filing an application for refund by unregistered persons
-reg.
Instances have been brought to the notice where the unregistered buyers, who had
entered into an agreement/ contract with a builder for supply of services of construction of
flats/ building, etc. and had paid the amount towards consideration for such service, either fully
or partially, along with applicable tax, had to get the said contract/ agreement cancelled
subsequently due to non-completion or delay in construction activity in time or any other
reasons. In a number of such cases, the period for issuance of credit note on account of such
cancellation of service under the provisions of section 34 of the Central Goods and Service Tax
Act, 2017 (hereinafter referred to as ‘CGST Act’) may already have got expired by that time.
In such cases, the supplier may refund the amount to the buyer, after deducting the amount of
tax collected by him from the buyer.
1.2 Similar situation may arise in cases of long-term insurance policies where premium for
the entire period of term of policy is paid upfront along with applicable GST and the policy is
subsequently required to be terminated prematurely due to some reasons. In some cases, the
time period for issuing credit note under the provisions of section 34 of the CGST Act may
have already expired and therefore, the insurance companies may refund only the proportionate
premium net off GST.
1.3 Representations have been received requesting for providing a facility to such
unregistered buyers/ recipients for claiming refund of amount of tax borne by them in the event
of cancellation of the contract/agreement for supply of services of construction of flat/ building
or on termination of long-term insurance policy.
2. It would be pertinent to mention that sub-section (1) of section 54 of the CGST Act
already provides that any person can claim refund of any tax and interest, if any, paid on such
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tax or any other amount paid by him, by making an application before the expiry of two years
from the relevant date in such form and manner as may be prescribed. Further, in terms of
clause (e) of sub-section (8) of section 54 of the CGST Act, in cases where the unregistered
person has borne the incidence of tax and not passed on the same to any other person, the said
refund shall be paid to him instead of being credited to Consumer Welfare Fund (CWF).
2.1 In order to enable such unregistered person to file application for refund under sub-
section (1) of section 54, in cases where the contract/agreement for supply of services of
construction of flat/ building has been cancelled or where long-term insurance policy has been
terminated, a new functionality has been made available on the common portal which allows
unregistered persons to take a temporary registration and apply for refund under the category
‘Refund for Unregistered person’. Further, sub-rule (2) of rule 89 of Central Goods and
Service Tax Rules, 2017 (hereinafter referred to as ‘CGST Rules’) has been amended and
statement 8 has been inserted in FORM GST RFD-01 vide Notification No. 26/2022-Central
Tax dated 26.12.2022 to provide for the documents required to be furnished along with the
application of refund by the unregistered persons and the statement to be uploaded along with
the said refund application.
3. In order to ensure uniformity in the implementation of the above provisions of the law
across field formations, the Board, in exercise of its powers conferred by section 168(1) of the
CGST Act, hereby clarifies the following:
4. Filing of refund application
4.1 The unregistered person, who wants to file an application for refund under sub-section
(1) of section 54 of CGST Act, in cases where the contract/agreement for supply of services of
construction of flat/ building has been cancelled or where long-term insurance policy has been
terminated, shall obtain a temporary registration on the common portal using his Permanent
Account Number (PAN). While doing so, the unregistered person shall select the same state/UT
where his/her supplier, in respect of whose invoice refund is to be claimed, is registered.
Thereafter, the unregistered person would be required to undergo Aadhaar authentication in
terms of provisions of rule 10B of the CGST Rules. Further, the unregistered person would be
required to enter his bank account details in which he seeks to obtain the refund of the amount
claimed. The applicant shall provide the details of the bank account which is in his name and
has been obtained on his PAN.
4.2 The application for refund shall be filed in FORM GST RFD-01 on the common portal
under the category ‘Refund for unregistered person’. The applicant shall upload statement
8 (in pdf format) and all the requisite documents as per the provisions of sub-rule (2) of rule
89 of the CGST Rules. The refund amount claimed shall not exceed the total amount of tax
declared on the invoices in respect of which refund is being claimed. Further, the applicant
shall also upload the certificate issued by the supplier in terms of clause (kb) of sub-rule (2) of
rule 89 of the CGST Rules along with the refund application. The applicant shall also upload
any other document(s) to support his claim that he has paid and borne the incidence of tax and
that the said amount is refundable to him.
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4.3 Separate applications for refund have to be filed in respect of invoices issued by
different suppliers. Further, where the suppliers, in respect of whose invoices refund is to be
claimed, are registered in different States/UTs, the applicant shall obtain temporary registration
in the each of the concerned States/UTs where the said supplier are registered.
4.4 Where the time period for issuance of credit note under section 34 of the CGST Act has
not expired at the time of cancellation/termination of agreement/contract for supply of services,
the concerned suppliers can issue credit note to the unregistered person. In such cases, the
supplier would be in a position to also pay back the amount of tax collected by him from the
unregistered person and therefore, there will be no need for filing refund claim by the
unregistered persons in these cases. Accordingly, the refund claim can be filed by the
unregistered persons only in those cases where at the time of cancellation/termination of
agreement/contract for supply of services, the time period for issuance of credit note under
section 34 of the CGST Act has already expired.
5. Relevant date for filing of refund:
As per sub-section (1) of section 54 of the CGST Act, time period of two years from
the relevant date has been specified for filing an application of refund. Further, the relevant
date in respect of cases of refund by a person other than supplier is the date of receipt of goods
or services or both by such person in terms of provisions of clause (g) in Explanation (2) under
section 54 of the CGST Act. However, in respect of cases where the supplier and the
unregistered person (recipient) have entered into a long-term contract/ agreement for the
supply, with the provision of making payment in advance or in instalments, for example-
construction of flats or long-term insurance policies, if the contract is cancelled/ terminated
before completion of service for any reason, there may be no date of receipt of service, to the
extent supply has not been made/ rendered. Therefore, in such type of cases, it has been decided
that for the purpose of determining relevant date in terms of clause (g) of Explanation (2) under
section 54 of the CGST Act, date of issuance of letter of cancellation of the contract/
agreement for supply by the supplier will be considered as the date of receipt of the services
by the applicant.
6. Minimum refund amount
Sub-section (14) of section 54 of the CGST Act provides that no refund under sub-
section (5) or sub-section (6) shall be paid to an applicant, if amount is less than one thousand
rupees. Therefore, no refund shall be claimed if the amount is less than one thousand rupees.
7. The proper officer shall process the refund claim filed by the unregistered person in a
manner similar to other RFD-01 claims. The proper officer shall scrutinize the application with
respect to completeness and eligibility of the refund claim to his satisfaction and issue the
refund sanction order in FORM GST RFD-06 accordingly. The proper officer shall also upload
a detailed speaking order along with the refund sanction order in FORM GST RFD-06.
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7.1 In cases where the amount paid back by the supplier to the unregistered person on
cancellation/termination of agreement/contract for supply of services is less than amount paid
by such unregistered person to the supplier, only the proportionate amount of tax involved in
such amount paid back shall be refunded to the unregistered person.
8. It is requested that suitable trade notices may be issued to publicize the contents of this
Circular.
9. Difficulty, if any, in the implementation of this Circular may be brought to the notice of
the Board. Hindi version will follow.
(Sanjay Mangal)
Principal Commissioner (GST)
