GST WEEKLY UPDATE : 06/2025-26 (11.05.2025) By CA Vipul Khandhar

-By CA Vipul Khandhar,

1. Invoice-wise Reporting Functionality in Form GSTR-7 on portal:

Vide Notification No. 09/2025 – Central Tax dated 11.02.2025, Form GSTR-7 has been amended to capture invoice-wise reporting with effect from 01.04.2025 i.e. the return period for April 2025 onwards.

In this regard it is to inform that development and testing of the same is underway, the implementation of invoice-wise reporting in Form GSTR-7 in GST portal will be deployed on portal soon. Thus, the enhanced functionality shall be deployed shortly, and users will be duly informed once the changes are made live on the portal.

2. Updates in Refund Filing Process for various refund categories

GSTN has been made important changes in the refund filing process under the following categories:

(a)    Export of Services with payment of tax

(b)    Supplies made to SEZ Unit/SEZ Developer with payment of tax

(c)    On account of Refund by Supplier of Deemed export

2. For the above refund categories, the requirement to select a specific tax period (‘From’ and ‘To’) while filing refund applications has been removed. The taxpayers can now directly proceed with selecting the refund category as above and clicking on “Create Refund Application.”
3. Taxpayers must ensure that all the returns (GSTR-1, GSTR-3B etc) due till the date of refund application, are filed.
4. The said refund categories are changed from ‘Tax Period based filing’ to ‘Invoice based filing’. The taxpayers can upload eligible invoices and claim refund in the following statements:

(a)    Export of Services with payment of Tax (Statement 2)

(b)    SEZ Supplies with payment of Tax (Statement 4)

(c)    In case of Deemed Exports, the application by Supplier (Statement 5B)

     The invoices once uploaded with a refund application will be locked for any further amendment and will not be available for any subsequent refund claims. The said invoices will be unlocked only if the refund application is withdrawn or a deficiency memo is issued.

3. Updates in Refund Filing Process for Recipients of Deemed Export.

GSTN has made the following changes in the refund filing process under the category “On account of Refund by Recipient of deemed export”:

1. Refund applications under this category is no longer need to be filed in chronological order of Tax Period which means Taxpayers are not required to select “From Period” and “To Period” while filing refund application.
2. Taxpayers must ensure that all the returns (GSTR-1, GSTR-3B etc) due till the date of refund application, are filed.
3. Under the afore said category, the table “Amount Eligible for Refund”has been modified. The columns of the revised table are explained hereunder:
4.    Col. 1 ‘Balance in ECL at the time of filing of refund application’. This column will reflect the balance available under various Head in Electronic Credit Ledger at the time of filing of application. It will be auto populated.
5.    Col. 2 ‘Net Input Tax Credit (ITC) of Deemed Exports (as per uploaded invoices)’,in this column the amount of claimed ITC, under respective major Heads will be auto populated based on invoices furnished in Statement 5B.
6. Col. 3 ‘Refund amount as per the uploaded invoices’reflects the sum of the amount of ITC claimed under all major Heads (IGST/CGST/SGST/UT) as per the invoices uploaded by the taxpayer in Statement 5B and shall be downward editable.
7. Col. 4 ‘Eligible Refund Amount’. In this column, maximum amount of ITC which is available for refund claim will be auto populated. It will be auto-calculated based on the order of debit specified in Circular No. 125/44/2019-GST dated 18.11.2019.
8.    Col. 5 “Refund amount not eligible as insufficient balance in the ECL (5)”. This column reflects the difference between the total amount of claimed ITC and the total amount of ITC available in Electronic credit Ledger under various major Heads.
9. Functionality has been improved to maximize the amount of refund a taxpayer can claim in terms of uploaded invoices, irrespective of the fact that sufficient balance is available in the respective Head of electronic credit ledger or not. Here, the total amount of claim under various Heads (IGST, CGST, SGST) will be compared with total amount of ITC available under various Heads in electronic credit ledger.
10. The taxpayers are advised to note these changes and if any problem is faced while filing of refund application, grievance may be raised in GST portal. https://selfservice. gstsystem.in/ReportIssue.aspx

4. Important Decisions:

(i) Supreme Court upholds 5% GST on badam – flavored milk:

The Supreme Court on Friday dismissed an appeal by the Revenue Department against a ruling by the Andhra Pradesh High Court on 5 per cent GST on badam-flavoured milk. Based on this, experts believe the GST Council may consider reviewing the levy on flavoured milk.

The Andhra Pradesh High Court, in the case of Sri Vijaya Visakha Milk Producers Company Ltd, classified ‘flavoured milk’ with almonds (badam) under Entry 0402 9990, attracting GST at 5 per cent. Earlier, the Madras High Court, in the case of Parle Agro, also held that flavoured milk should be classified under HSN 0402 and would thus attract GST at 5 per cent.

Fresh milk and pasteurised milk are fully exempt from GST. Further, milk products like curd, lassi, buttermilk, and paneer are also exempt from GST if sold loose, but attract 5 per cent GST when sold in pre-packaged and labelled form. Ultra-High Temperature (UHT) milk also attracts 5 per cent GST. Additionally, a GST of 12 per cent applies to condensed milk, flavoured milk, butter, ghee, and cheese.

This entry clearly incorporates milk and milk products. For example, milk food for babies, by normal standards, is not milk. However, it is treated as falling under 0402. Thus, the test propounded by the tax department — that only plain milk is to be treated as falling under 0402 — is incorrect, the Andhra Pradesh High Court had said. “Though the entry speaks only of milk containing added sugar or other sweetening matter, flavoured milk cannot be taken out of tariff heading 0402 merely because of the addition of 0.5 per cent badam flavour,” it said.

(ii) Gujarat Highcourt Decision Regarding Amended Rule   89(5) of CGST Rules, 2017 is clarificatory and applicable to all refund   claims

(Applicant – Filatex   India Ltd)

The assessee, involved in manufacturing and supplying yarns, faced an inverted duty structure from February 2021 to February 2022. Inputs and raw materials were   taxed at 18%, while the final product was taxed at 12%, leading to unutilized   ITC.

The assesse filed refund claims under Rule 89(5) due to the inverted duty structure, but the claims were only partially sanctioned. The tax paid on input services was excluded from the Net ITC computation, limiting the refund amount.

The assessee argued that the GST Council recommended changes to Rule 89(5), which were implemented by the Central Government through Notification No.14/2022 dated 05-07-2022. This notification applied to all refund claims, regardless of when they were filed.

The case Tirth Agro Technology (P.) Ltd. v. Union of India clarified that the amended Rule 89(5) applies to all refund claims filed before or after 05-07-2022.Therefore, the Authority cannot exclude input services from the Net ITC computation. The matter needs to be re-adjudicated according to the amended Rule 89(5) to ensure the assessee receives the appropriate refund.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

(The Author is a well known Chartered Accountant practicing in direct and indirect taxes)