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.