Refund of GST to Unregistered Home Buyers Upon Cancellation of Construction Service Agreement—ACS. Shruti Phophaliya

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers GST--Refund of GST Refund of GST to Unregistered Home Buyers Upon Cancellation of Construction Service Agreement ACS. Shruti Phophaliya In this write up, the learned author seeks to discuss about eligibility of unregistered home buyers to claim refund of GST paid by them to the builder in case of cancellation of construction service agreements, procedure of refund, refund sanction process and other interrelated aspects. 1. Introduction Until 48th meeting of GST Council, there was no procedure for claiming refund of taxes borne by the unregistered buyers in cases where the contract/agreement for supply of services, like construction of flat/ building and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over. To remove such difficulties faced by the unregistered buyers, the Central Board of Indirect Taxes and Customs (CBIC) issued Notification No. 26/2022-CT, dt. 26-12-2022 and Circular No. 188/20/2022-GST, dt. 27-12-2022, providing for new mechanism for unregistered buyers to claim refund of GST paid on cancellation of contract/agreement within the stipulated time period. It may be noted that this mechanism is applicable only for unregistered buyers and not for registered suppliers or recipients. 2. Who is unregistered person? An unregistered person is a person who is not liable to get registration under the provisions of sections 22 and 24 of the Central Goods and Services Tax Act, 2017 (CGST Act). A home buyer or a person who has purchased long-term insurance policy would be an individual person not carrying any business or profession hence, he is not required to get registered under the GST law. Therefore, he would be covered under the category of unregistered person. It would also include a person who is required to get registration under the GST law but he has not taken the same. 3. Circumstances in which unregistered buyers may claim refund under GST As per Circular No. 188/20/2022-GST, dt. 27-12-2022, the unregistered buyers may claim refund under GST in the following two situations: SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Refund of GST

Refund of GST to Unregistered Home Buyers Upon Cancellation of Construction Service Agreement

ACS. Shruti Phophaliya

In this write up, the learned author seeks to discuss about eligibility of unregistered home buyers to claim refund of GST paid by them to the builder in case of cancellation of construction service agreements, procedure of refund, refund sanction process and other interrelated aspects.

1. Introduction

Until 48th meeting of GST Council, there was no procedure for claiming refund of taxes borne by the unregistered buyers in cases where the contract/agreement for supply of services, like construction of flat/ building and long-term insurance policy, is cancelled and the time period of issuance of credit note by the concerned supplier is over.

To remove such difficulties faced by the unregistered buyers, the Central Board of Indirect Taxes and Customs (CBIC) issued Notification No. 26/2022-CT, dt. 26-12-2022 and Circular No. 188/20/2022-GST, dt. 27-12-2022, providing for new mechanism for unregistered buyers to claim refund of GST paid on cancellation of contract/agreement within the stipulated time period.

It may be noted that this mechanism is applicable only for unregistered buyers and not for registered suppliers or recipients.

2. Who is unregistered person?

An unregistered person is a person who is not liable to get registration under the provisions of sections 22 and 24 of the Central Goods and Services Tax Act, 2017 (CGST Act).

A home buyer or a person who has purchased long-term insurance policy would be an individual person not carrying any business or profession hence, he is not required to get registered under the GST law. Therefore, he would be covered under the category of unregistered person.

It would also include a person who is required to get registration under the GST law but he has not taken the same.

3. Circumstances in which unregistered buyers may claim refund under GST

As per Circular No. 188/20/2022-GST, dt. 27-12-2022, the unregistered buyers may claim refund under GST in the following two situations: