The Central Board of Indirect Tax and Customs (CBIC) has issued the procedure relating to sanction, post-audit, and review of refund claims.

According to section 107 of the Central Goods and Services Tax Act, 2017, the commissioner may review any decision or order, including an order of refund, with respect to its legality or propriety. The commissioner may direct any officer subordinate to him to file an appeal against the decision or order within 6 months of the date of communication of the decision or order.

As per the Circular 17/17/2017-GST dated November 15, 2017, pre-audit of refund orders is not required to be carried out, but the post-audit of the refund orders may, however, continue on the basis of extant guidelines.

The CBIC has received reports of different practises being followed by the field formations regarding sanction, review, and post-audit of refund claims. In certain commissionerates, speaking orders are issued in respect of all refund claims, whereas in others, speaking orders are not issued if the refund is sanctioned in full. Similarly, in the case of review and post-audit, different practises are being followed by the field formations.

The matter has been examined with the twin purpose of ensuring uniformity in procedure and enabling effective monitoring of sanction of refund claims in order to safeguard the interest of revenue.

The Board has issued the instructions/guidelines for sanction, post-audit and review of refunds.

"The proper officer shall follow the principle of natural justice before taking the final decision with regard to the refund claim. The principle of natural justice, inter alia, provides that a detailed speaking order needs to be issued, providing a basis for sanction or rejection of a refund. Therefore, while passing the refund sanction order in FORM GST RFD-06, the proper officer should also upload a detailed speaking order along with the refund sanction order in FORM GST RFD-06," the CBIC said.

The Board instructed that the ACES-GST portal provides the facility for uploading a document in pdf format along with the FORM GST RFD-06 order. The facility may be utilised by a proper officer for uploading the speaking order along with the refund sanction order in FORM GST RFD 06 so that it is made available to the refund applicant as well as the Post-audit/Reviewing Authority online.

According to current practice, all refund orders must be reviewed for the legality and propriety of the refund order, as well as to determine whether an appeal to the appellate authority under the provisions of sub-section (2) of Section 107 of the CGST Act must be filed against the refund order, CBIC instructed.

All the refund orders passed should be immediately transmitted online to the review module after the issuance of the refund order on FORM GST RFD-06. The review and post audit officers shall have access to all documents and statements on the ACES-GST portal pertaining to the said refund claims.

A Post-Audit Cell in Commissionerate Headquarters may be established for the purpose of post-auditing reimbursement orders, along with one or two Superintendents and Inspectors as needed.

The post-audit should be concluded within 3 months from the date of the issue of the FORM GST RFD-06 order. The findings of the post-audit shall be communicated to the review branch within the said time period of 3 months.

The review of the refund order shall be completed at least 30 days before the expiry of the time period allowed for filing an appeal under Section 107(2) of the CGST Act.

Instruction No. 03/2022

Dated: 14.06.2022

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