CBIC issues clarification on utilization of the amounts available in the electronic credit ledger; refund claim on deemed exports
Central Board of Indirect Taxes & Customs (CBIC) has issued Circular No. 172_04_2022 dated 6th July, 2022 to provide clarification on various aspects of GST.
Key points of the Circular are:
A. Refund claimed by the recipients of supplies regarded as deemed export
1. It has been clarified that, ITC availed by the recipient of deemed export supplies would not be subjected to provisions of Section 17 (Apportionment of credit and blocked credits) of CGST Act, 2017.
2. It has been clarified that, ITC availed by the recipient of deemed export supply for claiming refund of tax paid on supplies regarded as deemed exports is not to be included in the “Net ITC” for computation of refund of unutilised ITC on account of zero-rated supplies under rule 89(4) or on account of inverted rated structure under rule 89(5) of the CGST Rules, 2017.
B. Interpretation of section 17(5) of the CGST Act
1. It has been clarified that, the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act is applicable to the whole of clause (b) of sub-section (5) of section 17 of the CGST Act.
2. It has been clarified that, the word “leasing” referred in sub-clause (i) of clause (b) of sub-section (5) of section 17 refers to leasing of motor vehicles, vessels and aircrafts only and not to leasing of any other items. Accordingly, availment of ITC is not barred under sub-clause (i) of clause (b) of sub-section (5) of section 17 of the CGST Act in case of leasing, other than leasing of motor vehicles, vessels and aircrafts.
C. Perquisites provided by employer to the employees as per contractual agreement
It has been clarified that, the perquisites provided by the employer to the employee in terms of contractual agreement entered into between the employer and the employee, will not be subjected to GST when the same are provided in terms of the contract between the employer and employee.
D. Utilisation of the amounts available in the electronic credit ledger for payment of tax and other liabilities
1. It has been clarified that, any payment towards output tax, whether self-assessed in the return or payable as a consequence of any proceeding instituted under the provisions of GST Laws, can be made by utilization of the amount available in the electronic credit ledger of a registered person.
2. It has been clarified that, electronic credit ledger can be used for making payment of output tax only under the CGST or IGST Act. It cannot be used for making payment of any interest, penalty, fees or any other amount payable. Further, electronic credit ledger cannot be used for payment of erroneous refund sanctioned to the taxpayer, where such refund was sanctioned in cash.
