GST maze leaves exporters sulking for refunds

Published On: 01, Dec 2017 | Source:

In its 22nd meeting on October 6, the Goods and Services Tax (GST) Council had asked the government to quickly refund to the Integrated (IGST) paid on goods exported. Finance Minister Arun Jaitley announced that refunds will start from October 10, for exports made in July, and from October 18, for exports made in August. However, most have so far not received refund of the paid in July or subsequent months.
The Central Board of Excise and Customs (CBEC) issued a circular on November 7, stating that refunds of the paid on export goods cannot be made in many cases due to errors in export report/manifest (EGM), shipping bill and GSTR-1 returns of outward supplies for July. The said that common errors include incorrect shipping bill number in July GSTR-1 (that can be corrected only through Table 9 of August GSTR-1), mismatch of invoice number and paid amount in the shipping bill and GSTR-1, mismatch of information filed in EGM and shipping bill or non-filing of EGM, wrong bank account details given to Customs and manual shipping bills filed at some Inland Container Depots. However, these discrepancies do not explain why most have still not received refund of paid on export goods.

Investigations reveal that the EDI (electronic data interchange) system of the Customs is not suitably amended to take care of the new requirements under the laws and that is why the refunds are delayed. An example would make this clear.
An exporter prepares his invoice for exports of goods worth $100. If we take the exchange rate to be Rs 65.43 per dollar, the taxable value of the goods is Rs 6,543. Now, he calculates 18 per cent on the value, which works out to Rs 1,177.74. So, he rounds it up to Rs 1,178, because in accordance with Section 170 of the Central Act, 2017, he is required to round up the amount to nearest rupee. However, when he files the shipping bill in the Customs EDI system, it automatically drops the paise and rounds up the tax amount as Rs 1,177. When he files his monthly return in GSTR-1, the exporter enters the tax amount as Rs 1,178, according to his invoice. When the Network (GSTN) sends this detail to the Customs EDI system, the tax amount does not tally. So, the exporter’s refund claim does not get processed.
If this was the only problem, at least 50 per cent of the exporters, who had to ignore fifty paise or less for the purpose of rounding up to the nearest rupee, should have got their refunds. But it is not that simple. include several items in one invoice, work out the tax amount for each, aggregate the tax amount and then round off to the nearest rupee, whereas the Customs EDI works out the tax amount for each item ignoring the paise and then sum up the tax amount for the invoices. Here is the example:
In this invoice (see chart), the exporter rounds off the tax amount to Rs 5,300 in his invoice and reports it in his GSTR-1 returns. But this amount does not tally with the tax amount of Rs 5,298 in the shipping bill.  As the number of items increases and tax rates differ, the difference can be more. So, the Customs EDI software needs to be amended suitably.
 The second problem is that the Customs EDI system does not have a separate field to capture Invoice number and date. The have entered these details along with description of goods or at any place convenient.  Now, the exporter reports the shipping bill number and date and the corresponding invoice number and date in his GSTR-1 returns and the GSTN sends the same details to the Customs, where there is no automatic matching of the invoice number and date.
The blames for giving different invoice numbers and amounts in the GSTR-1 returns and for Customs purposes. It is possible that there are cases of wrong mention of shipping bill number or invoice number or paid amount, but such cases are likely to be very few. For correcting these, the has asked the GSTN to make the Table 9A of the August return available. 
The best course for is to disburse the amount shown in the shipping bill or invoice straightaway till the Customs EDI software is set right.