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Taxmen delay GST refunds on 'flimsy grounds' amid revenue crunch, companies allege

Nirbhay Kumar     October 20, 2020


  • Accounting professionals, tax experts have complained of unusual delays in GST refunds by tax authorities; many claimed officers were holding payments on flimsy grounds
  • Some blamed certain technical glitches on the GST Portal for delay in refunds
  • Firms with 'risky' exporters tag face deeper scrutiny leading to delay in refunds and also issues related to duty drawbacks
  • While GST collection has shown upward trend, revenue mop-up in the first half of FY21 was 25% lower over the corresponding period last year

Amid Centre grappling with GST revenue shortfall, taxpayers and accounting professionals have complained of unusual delays in refunds by tax authorities with many of them claiming that officers were holding payments on flimsy grounds.

While refunds for 'risky' exporters have been a contentious issue, tax consultants with sizeable client base said that technical glitches are also being cited for pending GST refunds.

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"Certain field formations are consciously delaying refunds even in case of cash ledger refunds and TCS (tax collected at source) refunds where dealers deposit tax in cash or TCS is collected from them and they get refunds in cash. While earlier it took 5-7 days, it is now taking minimum one month, in certain states even more," noted Vivek Jalan, Partner, Tax Connect Advisory Services.

After crashing in the month of April, monthly GST collections have improved month-on-month with the gradual opening of economic activities following a nationwide lockdown. At Rs 95,480 crore in September, GST revenue recovered posting 3.8 per cent increase over the same month last year. Compared to August, the collections were higher by 10 per cent.

While GST collection has shown upward trend, the revenue mop-up in the first half of FY21 was 25 per cent lower over the corresponding period last year. With GDP growth projected to de-grow in current fiscal, revenue collection is set to remain far behind the budgeted target.

Industry insiders do not rule out lack of funds as reason for refund delays as sanctioning claims on net basis means collection going down. A veteran GST practitioner said that tax authorities are required to process the claims in accordance with law so there have been reports of mechanically rejecting the claims on flimsy grounds.

"We have not got any refunds since September 1. Tax officers are very carefully processing the refunds and they are asking for very detailed information and documents to prove the legitimacy of the claims. This has resulted in delays. The officers keep asking for all kinds of documents," said Rajat Mohan, senior partner at AMRG Associates.

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Federation of Indian Export Organisations (FIEO) president Sharad Kumar Saraf said GST refunds were getting delayed by 2-3 months.

Maintaining that GST refunds are processed in time in case documents are in order but faces delay for months if there are minor errors, Ajay K Kadakia, Chairman of Basic Chemicals, Cosmetics & Dyes Export Promotion Council, popularly known as Chemexcil, said risky exporters tag is a major problem.

"They (revenue department) have identified certain exporters as risky exporters. Forget about GST refunds, they don't get drawbacks. We are pursuing the issue with Ministry of Finance and the Ministry of Commerce to at least get the status-holders removed from risky exporters category. We understand that revenue leakage is a serious concern of the government but at the same time when we want to increase our exports, we have to give certain priority to the exporters," said Kadakia.

Meanwhile, Tax Connect's Jalan pointed out technical glitches on GST portal for delay in refunds.

"Certain technical glitches on the GST Portal are also delaying the refunds. It is being cited by some officers that they cannot see the refundable amount on their screen while assessees can see the same," he said.

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