GST -- Brief – Exports and

Refunds
Sanjay Mahendru
Commissioner, Service Tax, Mumbai
CBEC
 GST---Concept and Evolution

• In less than 50 years GST / VAT has become one of the most
dominant revenue instruments across the world.
• Adopted by more than 150 countries and accounts for 20% of
world tax revenue.
• Attributed to German businessman Dr. Wilhelm von Siemens, who
in 1918 proposed VAT as a refinement to the cascading turnover
tax.
• Adams, an American economist, proposed VAT as an invoice credit
method.
• Most prominent growth in developing and transitional economies.
• Far fewer countries in the world without a VAT than with VAT.
 GST -- Scope
• Transactions that fall within the VAT scope are
the supply of Goods and Services for
consideration within the taxable territory by a
taxable person.
• As per the GST Acts, consideration is not an
essential element for a transaction to be
covered under “Supply.”
 VAT- Advantages….
Revenue Generation –
• VAT is considered a revenue workhorse. Properly designed and administered, it
can raise more revenue with lower operational and economic costs than can
other broad based consumption taxes.
• Estimates suggest that each one percent increase in the VAT rate would raise an
additional 0.5% of GDP in revenue.
Neutrality –
• VAT does not interfere, or interferes less than other taxes, with market decisions
relating to consumption, production or saving
• Forms or methods of doing business are not influenced as the tax is forward
shifted to consumers.
• Choices to consume or save are not influenced
• Consumption of products and services is not impacted as all are taxed alike.
• VAT levied on destination basis is neutral toward international trade.
 Broad Features
Efficiency –
• VAT falls only on final consumption and not intermediate business transactions
and thus facilitates production efficiency.
• Its incremental and self enforcing collection mechanisms said to be
administratively efficient and reduce cost of compliance.
Broad based—
• Levied at multiple stages of production, with taxes on inputs credited against
taxes on output.
Zero rated –
• Refers to a situation where Rate of tax applied to supplies is zero, though credit
is still given for taxes paid on inputs ( Exports). As against Exemption.
• In Australian GST Zero Rating is called “ GST free,” and “exemption” instead
called “input taxed.”
• Zero rating of select domestic transactions is extensive in Ireland and UK.
 Broad Features
Diversity in Practice and Experience
• Standard rate varies from 3% in Singapore to 25% in
Denmark and Sweden.
• Most countries have single VAT rate, while others have
several rates ( Colombia has 7).
• Standard rate is higher in Western Europe and transition
economies and lowest in Asia Pacific region.
• Tax revenue is noticeably higher in countries with VAT than
those without.
• But for US and India, other non VAT countries are marked by
relatively smaller populations.
 Constitutional Provisions – Post 101st
Amendment
Seventh Schedule [ Art. 246]
LIST I – UNION LIST

• 84. Duties of excise on the following goods manufactured or produced in India, namely:-
Petroleum crude, high speed diesel, motor spirit, natural gas, ATF, and tobacco and tobacco products.
• Before substitution….
• Duties of excise on tobacco and other goods manufactured or produced in India except –
a. alcoholic liquors for human consumption;
b. opium, Indian hemp and other narcotic drugs and narcotics,
but including medicinal and toilet preparations containing alcohol or any substance..

• 92 ---Omitted.
• Before Omission…..
• Taxes on the sale or purchase of newspapers and on advertisements published therein.

• 92C ---- Omitted

• Before Omission….. “Taxes on Services”
 Constitutional Provisions – Post 101st
Amendment
LIST II – STATE LIST
• 52 – Omitted
• Before Omission…. “Taxes on the entry of goods into a local area for consumption, use
or sale therein”

• 54. taxes on the sale of five petro products and alcoholic liquor for human
consumption, but not including sale in the course of inter-state trade or commerce
or sale in the course of international trade or commerce of such goods.

• 55 – Omitted
• Before Omission…. “ Taxes on advertisements ……

• 62. taxes on entertainment and amusements to the extent levied and collected by a
Panchayat or MunicIpality or a Regional council or a District Council. ( EARLIER
THERE WAS NO RESTRICTION TO LOCAL BODIES)
 Constitutional Provisions – Post 101st
Amendment
●
Notwithstanding anything contained in Article 246 and 254, Parliament, and subject to

Article 246A. (1) Clause (2), the Legislature of every State, have power to make laws wrt goods and
services tax imposed by the Union or such State.

●
Parliament has exclusive power to make laws wrt goods and services tax where the

Article 246A. (2) supply of goods, or of services, or both takes place in the course of inter-state trade or
commerce.

●
Residuary power of legislation vests with Parliament (Art. 248)

Art. 248 and 249 ●

Power of Parliament to legislate wrt a matter in the State list in National interest (Art.
249)

Art.268 – Stamp Duties levied by the Union but levied and appropriated by the States.

Art. 268,269
●

Art. 268 A -- Service Tax levied by Union and collected and appropriated by the Union and the States --- Omitted by the 101st Amendment Bill,2016.
●

Art.269 –Taxes on the Sale or purchase of goods and taxes on the consignment of goods ( except as provided in Art. 269A) levied and collected by the
●

Union but assigned to the States.

 Constitutional Provisions – Post 101st Amendment

●
(1) Goods and Services Tax on supplies in the course of interstate trade or
commerce shall be levied and collected by the Govt. of India and such tax shall

Art. 269 A
be apportioned between the Union and the States in the manner as may be
provided by Parliament by law on the recommendations of the GST Council. ……
●
(2) Parliament may, by law, formulate the principles for determining the place
of supply, and when a supply of goods, or of services, or both takes place in the
course of inter-state trade or commerce.

●
Taxes levied and collected by the Govt. of India

Article 270 shall be distributed between the Union and the

States except those under 246 (2), 268, 269
and 269 A
 Constitutional Provisions – Post 101st
Amendment
• GST Council
• Art. 279 A provides for the constitution and functions of the GST Council.
• Art. 279 A (4) -The GST Council shall make recommendations to the Union and the States on :
• The taxes, surcharges , and cesses levied by the Union, States and local bodies which may be
subsumed in the GST;
• The goods and Services that may be subjected to, or exempted from GST;
• GST Law, principles of levy, principles that govern the place of supply;
• Threshold turnover for exemption;
• Rates, special rates of GST;
• Special provisions wrt specific States;
• The date on which GST will be levied on the five petroleum products;
• Shall establish a mechanism to adjudicate any dispute ---
a. Between Govt. of India and one or more States; or
b. Between the Govt. of India and any State or States on one side and one or more other States on the
other side; or
c. Between two or more States arising out of the recommendations of the Council or implementation
thereof.
 GST – Acts and Rules
• Five Acts ----
• Integrated GST Act
• Central GST Act
• State GST Act/s
• UT GST Act
• Compensation to States Act

• Rules
• Registration Rules
• Invoice Rules
• Return Rules
• Refund Rules
• Payment of Tax Rules
 Exports under GST
• Export and Import is dealt with by the IGST Act.
• CGST & SGST donot even define the terms
• Export definition –Section 2(5) of IGST Act
• “export of goods” with its grammatical variations and cognate
expressions, means taking goods out of India to a place outside India.
• “export of services” means the supply of any service when,--
• i. when the supplier of service is located in India;
• ii. The recipient of service is located outside India;
• iii. The place of supply of service is outside India;
• iv. The payment for such service has been received by the supplier of
servicein convertible foreign exchange;
• The supplier of service and the receipient of service are not merely
establishments of a distinct person.
• “import of goods” with its grammatical variations and cognate
expressions, means bringing goods into India from a place
outside India.
• “import of services” means the supply of any service where,--
• i. the supplier of service is located outside India;
• ii. The recipient of service is located in India;
• iii. The place of supply of service is in India;
• SEZ and SEZ developer have also been defined under the Act.
• Supply to SEZ in the state will not be an Intra state Supply
• Imports are treated as Interstate supply.
 Place of Supply of Goods and Services

• The place of supply of goods

• imported into India shall be the location of
the importer
• Exported from India shall be the the location
outside India
• The place of supply of Service shall be the
location of the recipient.
 Zero Rated Supply
• Section 16(1)– zero rated supply means any of the following supplies of
goods or services or both, namely:-
• a. export of goods or services or both
• b. supply of goods or services or both to a sez Developer or Unit.
• Credit of input tax may be availed for making zero rated supply
• A registered person making zero rated supply may
• a. supply goods or services or both under bond or LUT without payment of
integrated tax and claim refund of unutilized ITC.
• b. supply goods or services or both on payment of integrated tax and
claim refund.
 Refunds
• Refund to claimed electronically through the common portal in form GST
RFD-01
• In case of export application for refund shall be filed only after the export
manifest or an export report is delivered under Section 41 of the Customs
Act
• For supply to SEZ unit or developer, the application for refund shall be
filed by the supplier after such goods or services have been admitted or
received in full in SEZ for authorized operation and so endorsed by the
specified officer of the Zone
• In respect of supplies regarded as Deemed exports, the application shall
be filed by the recipient of deemed export supplies.
• Shipping bills, export invoices and BRC or FIRC to be
submitted
Thank You