GST refunds stuck over mismatch between GSTR-1 and shipping bill

A mismatch in the figures quoted by exporters in the Export General Manifest (EGM) and the corresponding invoice in the GSTR-1 has affected the disbursement of refunds to exporters under the GST that started on 10 October.

As per CGST Rules, shipping bill filed by an exporter is considered as application for refund of IGST on goods exported out of India and once EGM and valid GST return has been filed the disbursement process starts.

However, reports quoting senior finance ministry officials said the disbursement process had to be halted after Rs150 crore out of the total claim of Rs735 crore of integrated GST paid by the exporters in July.

Tax officials are now trying to reach out to exporters for cases where the mismatch has been detected. Customs authorities have been instructed to reach out to the exporters for whom mismatches have been detected.

While the government intends to release refunds as soon as possible, it has to ensure that the process is flawless and discrepancies do not occur. The mismatches have created a need for verification from some exporters.

Ajay Sahai, director-General of the Federation of Indian Exports Organisation (FIEO), said exporters are being sensitised on the possible lapses and the delay it could cause in getting refunds for needy exporters.

The 10-digit EGM number, which is a proof for exports, is entered manually by the customs and there could be some errors there as well. There is a need for a fool-proof system and the technical challenges need to be dealt on a war footing, he added.

The CEBC had instructed the customs authorities that filing of correct EGM is a must for treating shipping bill or bill of export as a refund claim, even as the government started the process of refund for July from 10 October.

The process of refund for IGST paid on exports in August, which was proposed to start on 18 October, however, is yet to start.

GSTN chief executive Prakash Kumar had said on Monday the electronic facility for exporters to claim refunds for GST paid in August and September would be launched this week.

Exporters who enjoyed upfront tax exemption on exported goods, are required to pay taxes before procurement of goods and services under GST.

They can avail of input tax credit after sale within the domestic tariff area or after sending their shipments outside the country and can then claim the unutilised credit as refund, a process which had blocked their working capital and raised their operating cost.

FIEO had claimed that if refunds do not start flowing immediately, then about Rs 60,000-65,000 crore would be stuck by the end of October.