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Supplies to an SEZ unit/SEZ developer can be made in two ways. It can be done with the payment of tax and subsequently claiming a refund thereof. Alternatively, it can be done without payment of tax since they are zero-rated supplies. A taxpayer may apply for a Letter of Undertaking (LUT) and, in turn, claim the refund of accumulated ITC. In this article, we will learn more about both the processes.

Let’s look into each of the two possible ways to supply SEZ unit/developer and application for refund of GST:

  1. Refund of GST with payment of tax
  2. Refund of ITC without payment of tax

Refund of GST with payment of tax

Step 1: Log in to the GST portal

 

Step 2: Select the relevant refund type

Go to Services Tab > Refunds > Application for refund. A list of the types of refund will be displayed. Select ‘On account of supplies made to SEZ unit/SEZ developer (with payment of tax)’ option and click on ‘Create’.

 

Step 3: Choose the financial year and tax period for which refund is being claimed.

All refund applications need to be filed in chronological order. Thus, when filing a refund application for this first time, the portal hints the taxpayer asking to file Nil returns for all previous tax periods. A Nil return will be filed for earlier tax periods using EVC or DSC if ‘Yes’ is selected at this step. It will not be possible to file returns again for those periods anytime in the future. 

In case a Nil refund application is not chosen, then the below screen appears:

Step 4:  Fill in the data using the offline excel utility and upload the JSON file on the portal

A screen for ‘Refund of ITC on account of supplies made to SEZ unit/SEZ developer (with payment of tax)’ opens up. It has to be ensured that the refund of IGST and cess claimed cannot be more than the amount declared in Form GSTR-3B for the same period.

 

Click on ‘Download Offline Utility’ to use excel utility to enter the data into Table 4. Open the excel sheet and fill in the necessary details. It includes supply information such as GSTIN, the period of return (from and to), Sr. no., invoice details (No., date and value). It further includes a selection of goods or services, shipping bill details (optional), etc. One must ensure that the details match with the GSTR-1 filed for that period.

Click on ‘Validate and Calculate’ after the data is entered to identify errors. The count of records in the sheet will be displayed and click on ‘Ok’ to proceed. Certain errors such as missing data, invalid data format, etc. will be detected and be displayed in the ‘Errors’ column. Ensure that the errors have been corrected and the sheet is validated once again until no error is shown (Error column turns blank).

Click on ‘Create File to Upload’ to save the JSON file at the desired location of your system. 

Upload the JSON file on the portal by selecting ‘Click to upload the details of supplies made to SEZ/SEZ Developer with payment of tax’ and thereafter the ‘Click here to upload’ button. Browse to where the JSON file was saved and click on ‘Open’.

A message will be displayed confirming the same along with an option to download the unique invoices. Select the declaration checkbox and click on ‘Proceed’. A message appears to get your confirmation for proceeding to file the refund application. Click on ‘Proceed’. The ‘Validate Statement’ option will now be available for any errors. If there are no errors, a confirmation message will appear, mentioning that the statement has been successfully submitted after validation. An option will be made available to download invalid invoices in case of any errors. Rectify the errors against the invoices that were invalid and delete the uploaded statement. Make the necessary changes in the offline utility and repeat the process of uploading the JSON.  

 

 

Electronic Liability Ledger may be viewed at this stage. Use ‘Go Back to Refund Form’ option to return to the application. If there are any pending liabilities and refund application is submitted, the refund order will be prepared after adjusting for the pending dues. The saved refund applications (at any stage) stays on the portal for 15 days after which they will be deleted and a fresh application will have to be made.

Step 5: Enter other information

Select the bank account number from the drop-down list. If the desired bank account number is not appearing in the list, the taxpayer’s registration details need to be amended. 

 

Next, upload all the supporting documents, if any. Click on the ‘save’ button to proceed. The application is accessible for next 15 days on the GST portal.

Use the ‘preview’ option to verify if all the details are in order. Checkmark the Declaration and Undertaking and apply. A message appears acknowledging the successful submission of the application.

 

Step 6: Sign using either EVC or DSC and complete filing

Two options are available for signing the form. Choose either ‘File with DSC’ and ‘File with EVC’. Select from the drop-down list showing the authorised signatories will appear. Note that for Company/LLP type of entities, it is compulsory to file using the DSC. 

Filing with DSC would require the taxpayer to attach the digital signature. 

Filing with EVC (Electronic Verification Code) would require OTP that is received on the registered e-mail address/mobile number. 

 

After selecting ‘Sign’ (in case of filing with DSC) or ‘Verify’ (in case of filing with EVC), the message confirming successful filing is displayed.

The Application Reference Number (ARN) is made available in PDF form.

Refund of ITC without payment of tax

Step 1: Log in to the GST portal

Step 2: Select the relevant refund type

Go to Services Tab > Refunds > Application for refund. A list of the types of refund will be displayed. Select ‘On account of supplies made to SEZ unit/SEZ developer (without payment of tax)’ option and click on ‘Create’.

Step 3: The financial year and tax period for which refund is being claimed need to be selected.

It is pertinent to note that all refund applications need to be filed in chronological order. Thus, when filing a refund application for this first time, the portal prompts the taxpayer to file Nil returns for all previous tax periods. If ‘Yes’ is selected at this step, a Nil return will be filed for earlier tax periods. Further, it will not be possible to file returns for those periods in the future.

Step 4:  Enter the relevant data using the offline excel utility and upload the JSON file.

A page opens up on ‘Refund of ITC on account of supplies made to SEZ unit/SEZ developer (without payment of tax)’.

Click on ‘Download Offline Utility’ to get the utility in a zipped format. 

Extract and open the excel sheet to fill in the necessary details. The details to be filled up include GSTIN, the period of return (from and to), serial no., invoice details (number, date and value), whether goods or services, shipping bill details (optional), etc. Ensure that the details match with the GSTR-1 filed for that period. 

Click on ‘Validate and Calculate’ after the data is entered. The number of records in the sheet will be displayed. Click on ‘Ok’. If certain errors like missing data, invalid data format, etc. are detected, check the ‘Errors’ column and correct them. Validate again until no error is shown (error column must be blank).

Click on ‘Create File to Upload’ and save it at the desired location. This will convert the data into JSON format for easy upload.

Upload the JSON file created by selecting ‘Click to upload the details of supplies made to SEZ/SEZ developer’. Press the ‘Click here to upload’ button. Browse to the saved location of the JSON file and click on ‘Open’.

A message will be displayed for successful upload along with an option to download the unique invoices. Tick mark the declaration checkbox and click on ‘Proceed’. A message will appear to warn and get your confirmation to proceed with the refund application. Click on ‘Proceed’. 

Click on the ‘Validate Statement’ option to check for any errors. In case of zero errors, a message is displayed confirming the successful submission. In case of any errors, download all the invalid invoices and rectify the same by identifying the invoices that were invalid. Delete the earlier uploaded statement, make necessary changes in the offline utility and thereafter repeat the process of uploading the JSON file.  

Step 5: Enter the details in the Table ‘Computation of Refund to be claimed Statement-5A [rule 89(4)]

Turnover of zero-rated supply of goods and services

(1) (Rs)

Adjusted total turnover

(2) (Rs)

Net input tax credit (3) (Rs)

[auto-populated but can be edited as per Rule 89(4)]

Maximum refund to be claimed  (4)((1×3)/2)

(Rs)

Integrated tax (Auto-populated)
Central tax
State/UT tax
Cess (Auto-populated)
Total (Auto-populated) (Auto-populated)

Step 6: Enter the details in the Table ‘Amount Eligible for Refund’.

Balance in the Electronic Credit Ledger at the end of the period for which GST refund is claimed (balance remaining after return for this period is filed) (1) (Rs) Balance in Electronic Credit Ledger at the time of filing of refund application (2) (Rs) Refund to be claimed (3) (Rs)
Integrated tax [Lower of:

  • Formulae based value of refund as per Statement 5A
  • ITC Ledger balance as on date of filing refund application 
  • ITC Ledger balance claimed and available at the end of the tax period for which refund is claimed]
Central tax
State/UT tax
CESS
Total

Note that the Electronic Liability Ledger may be viewed at this stage. Click on ‘Go Back to Refund Form’ to return to the application. The application can also be saved and put on hold so that the liabilities, if any, may be settled. If there are any pending liabilities and refund application to be submitted, the refund order will be prepared after adjusting the pending dues. Saved refund applications (at any stage) will be available on the portal for a maximum of 15 days after which they will be deleted and a fresh application will have to be made.

Step 7: Submit other information

The bank account number will have to be selected from the drop-down list. In case the desired bank account number is not appearing in the list, the registration details of the taxpayer must be amended before proceeding to apply for GST refund. 

Supporting documents, if any, will have to be uploaded.

‘Whether you have submitted the bond/undertaking (Form GST RFD-11)’ – either yes or no will have to be selected. If yes, then the reference number of the bond/undertaking filed will have to be entered. To proceed, click the ‘save’ button.

The application can now be accessed for up to 15 days as it is successfully saved on the GST portal. 

Click on the ‘preview’ button and ensure that all the details are in order. Select the checkbox for the Declaration and Undertaking and Click on ‘Submit’. A message will appear acknowledging the successful submission of the statement.

Step 8: Sign using EVC or DSC and finish filing

After the declaration checkbox is selected, a drop-down list showing the authorised signatories will appear. Select either ‘File with DSC’ and ‘File with EVC’. Note that for Company/LLP type of entities, it is compulsory to file using the DSC. 

Filing with DSC would require attachment of a digital signature. 

Filing with EVC (Electronic Verification Code) would require OTP to be entered as it is received on the registered email address/mobile number. 

After clicking on ‘Sign’ (in case of filing with DSC) or ‘Verify’ (in case of filing with EVC), a confirmation message is displayed and the Application Reference Number (ARN) is made available in the PDF form.

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