All about GST Form PMT-03 & PMT-03A under GST

Any taxpayer can claim a refund of excess GST or interest paid by filing an application in GST RFD-01 within two years from the relevant date. Immediately, on filing an application, the electronic cash or credit ledger gets debited for the amount of refund claimed. But, if the claim gets rejected, the Input Tax Credit (ITC) should be given back to the taxpayer in his electronic cash/credit ledger. This was not happening before the introduction of Form GST PMT-03 as the tax officials didn’t have a facility for re-crediting rejected refund claims.

What is Form PMT-03 as per Rules?

PMT-03 is an order to re-credit cash/ITC amount on the rejection of a refund claimed. So, whenever a refund amount is rejected as per Rule 92 of the CGST Rules, the rejected amount either in full or part is re-credited to the electronic credit ledger by an Order in Form PMT-03. This is done by a proper officer using Form GST RFD-01B.  

Who uses Form PMT-03 and circumstances attracting it?

Form GST PMT-03 can be used only for those refunds for which a debit takes place in the electronic cash or credit ledger of the taxpayer at the time of filing the refund claim. Below are the types of refund for which a debit takes place in the electronic cash/credit ledger of the taxpayer:  

Sr. No.	Type of refund	Ledger
1	Refund of the excess balance of cash	Cash ledger
2	ITC accumulated through the export of goods or services without payment of tax	Credit Ledger
3	On account of supplies made to SEZ unit/ SEZ developer without payment of tax	Credit Ledger
4	Recipient of deemed export supplies	Credit Ledger
5	ITC accumulated due to the inverted tax structure	Credit Ledger

On the successful generation of ARN for any of the above-listed refund types, the task will automatically move to the ‘Pending for Provisional Refund’ stage. The tax officer can then proceed to verify and sanction the provisional refund.  

Cases where Form PMT-03 is not used

If a tax officer finds that the refund application is incomplete for any reason, he may file a Deficiency Memo against the refund claim of a taxpayer. In this case, the entire amount debited will be re-credited to the same ledger. There is no requirement on the side of the tax officer to issue PMT-03. The applicant taxpayer has to rectify the deficiencies and then file a fresh refund application.  

Format and Contents of PMT-03

The Form GST PMT-03 looks as follows:

Basic Details: 
The tax officer will mention the basic details of the applicant like name, GSTIN, address, and the tax period for which the refund pertains to. 

Ledger to which the debit entry was made: 
Electronic Cash/Credit Ledger 

Debit entry Number: 
The Officer will have to mention the debit entry number, date and ARN of the application for refund. 

Amount of credit:
The tax officer has to mention the type of tax (IGST, SGST, CGST, interest, etc.) and the amount re-credited on account of rejection.

How to respond to the issue of the order in PMT 03

A tax official can re-credit the electronic credit ledger by the issue of PMT-03 only after the receipt of an undertaking from the applicant that he shall not file an appeal against the order.

Suppose he still files an appeal, the same will be decided against the applicant as per the rules. If the applicant still files an appeal against the order in PMT-03 and the appellate authority decides in favour of the applicant, then he can file a fresh refund claim using the ‘Claim Refund’ option ‘On Account of Assessment/Provisional Assessment/Appeal/Any other Order’. Accordingly, manual credit can be taken by the taxpayer.

Let’s understand with the help of an example.

Mr A files a refund claim of Rs.150 on account of accumulated ITC. Out of this, Rs.50 gets rejected. A tax officer issues a show-cause notice in Form GST RFD-08 (refund rejection) requiring the applicant to show cause why Rs.50 should not be rejected on account of ineligible ITC. If the reply to the notice is not accepted, the tax officer will enter Rs.50 (along with interest and penalty) in the electronic liability ledger of the applicant through the issuance of Form GST DRC-07. Further, Rs.50 will be re-credited (through PMT-03) to the electronic credit ledger of the applicant on receiving an undertaking from him that he shall not file an appeal against the order in Form GST PMT-03.

Cases of refund covered under the Rule 86(4B)

Rule 86 (4B) of the CGST rules covers the scenarios of erroneous refund sanctioned to a registered person and the procedure for the re-credit of the same.  It covers two instances of the deposit of erroneous refund-

• under sub-section (3) of section 54 of the Act, or
• under sub-rule (3) of rule 96, in contravention of sub-rule (10) of rule 96.

The deposit of erroneous refund along with the applicable interest and penalty is to be made through Form GST DRC-03 by the taxpayer. Once the the Form GST DRC-03 is vetted by the proper officer, the order shall be passed by him in Form GST PMT-03A. Moreover, an amount equivalent to the amount of the erroneous refund shall be re-credited to the electronic credit ledger of the taxpayer.

Therefore, if the refund has been sanctioned erroneously in any of the below-mentioned categories, recredit of that amount can be done via Form GST PMT-03A in the electronic credit ledger, along with the interest and penalty, by the taxpayer-

• Refund of Input Tax Credit as a result of the inverted tax structure.
• Refund of unutilised ITC with regard to zero-rated supply of goods or services to SEZ developer or Unit without any payment of tax.
• Refund of GST obtained in contravention of Rule 96(10).
• Refund of unutilised Input tax Credit on account of export of goods or services without any payment of tax.

Format of PMT-03A

The format of the Form PMT-03A as per the recent circular is as follows-

Steps taken by taxpayer to get re-credit of erroneously refunded ITC

FORM GST PMT-03A was introduced to allow the proper officer to re-credit the amount in the electronic credit ledger of the taxpayer in cases of erroneous refunds. The steps to be taken by the taxpayer for such re-credit are as follows-

Step 1: Filling up of Form GST DRC-03

First, the taxpayer must fill in the details in Form GST DRC–03 and deposit the amount of the erroneous refund. Additionally, the interest and penalty on the refund, wherever applicable, is to be included via a debit of the amount from the electronic cash ledger. The taxpayer must also clearly indicate the reason for making the payment. The reason could be the deposit of erroneous refund of unutilised ITC or the other categories mentioned above in the text box provided in the Form GST DRC-03.

Step 2: Written request by the taxpayer

The taxpayer is required to make a written request as per the format given in Annexure A to the jurisdictional proper officer, requesting the re-credit of an amount equivalent to the refund. This shall continue to be the procedure until such time that an automated facility for handling such cases is introduced.

Step 3: Verification of Form GST DRC-03 and passing of the order in Form GST PMT-03A

The officer must be satisfied that the amount of the refund (along with penalty and interest, wherever applicable) has been paid by the taxpayer via the GST DRC-03 form. The amount paid must also be done as per the provisions of the CGST Act under Section 50. Once this is done, he will then re-credit the amount equivalent to the erroneous refund in the electronic credit ledger. This will be done through an order passed by the officer in Form GST PMT-03A. The order shall be passed within 30 days from the date of receipt of the request for the relevant re-credit or from the date of payment of the erroneous refund, whichever is later.