Refund claim under Rule 89(4) (c) which is amended and included for zero rated supply "value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier,". Does it mean refund is restricted to 1.5 times of similar goods of domestic sale? what if there is no domestic sale for the same product and only export during the month? Whether it should be compared each product wise?Reply—

Reply: Amendment has been made in definition of Turnover of zero-rated supply of goods (notification no. 16/2020 dated 23.03.2020.

New definition—  “Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking or the value which is 1.5 times the value of like goods domestically supplied by the same or, similarly placed, supplier, as declared by the supplier, whichever is less, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both;

Old definition— "Turnover of zero-rated supply of goods" means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking, other than the turnover of supplies in respect of which refund is claimed under sub-rules (4A) or (4B) or both;

As per new definition value of export will be deemed 1.5 times of value of the same goods if supplied domestically or the actual value of zero rated supply, whichever is less. This is not 1.5 times of domestic turnover. Therefore, if the exporter is not making any domestic turnover then the value of same goods supplied by other suppliers  will be taken into consideration for calculating turnover of zero rated supply.

For example— Suppose value of export (without payment of tax) is 10 lakhs, value of same goods domestically supplied is 6 lakhs and ITC is of Rs. 6 lakhs,

Refund under rule 89 is detemined as per following formula—

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ÷Adjusted Total Turnover

maximum amount of refund will be i.e 9 lakhs/10 lakhs x 6 lakhs = Rs. 5.4 lakhs

Turnover of zero-rated supply of goods — Rs. 9 lakhs ( Actual export value Rs. 10 lakhs or 1.5 times of Rs, 6 lakh i.e domestic supply value of same goods which comes to Rs.9 lakhs, whichever is less)

Turnover of zero-rated supply of services — assumed 'Nil'

Net ITC — 6 lakhs

Adjusted turnover — 10 lakhs

In the old provision the taxpayer was eligible to claim refund of total ITC i.e. 6 lakhs.