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Advisory in relation to Invoicing related to Exports on payment of IGST

Advisory in relation to Invoicing related to Exports on payment of IGST

Since the inception of GST, Exports on payment of IGST has been a relief for the exporters who wanted to avail the refunds of their accumulated ITC. However, this has been a headache for the department, since the exporters were not able to cop up with this new regime and there were differences between the shipping bill and the Invoice vis a vis the details furnished at the GSTR-1 portal and due to this reason they had to process various refunds manually whereas their ultimate aim was to process refunds automatically. So, we have brought you the advisory in relation to Invoicing related to Exports on payment of IGST.

Looking at this, it became pertinent for the Govt. to close down the manual processing facility and they are going to close this facility for the Invoices made post 15.11.2018. After closure, there will be no manual processing and for any difference between the details at the Shipping Bill and GSTR-1, the refunds will not be processed. (Also refer to Circular No. 40/2018 – Customs)

Invoicing related to Exports on payment of IGST

Since, this is facility is going to cease, we should now understand the common mistakes and understand their possible resolution. For invoicing related to Exports on payment of IGST.

Common Mistakes made by the assessees in Invoices:-

  1. Changing invoices:- Under GST regime Invoice is required to be prepared at the time or before the time of removal of goods from the place of business. As soon as the material is removed from the factory the Invoice needs to be prepared and that should be final Invoice of the assessee, in which no further change should be made and the same only should be filed in GSTR-1.

However, the assessees tend to change their Invoices as per the shipping bill. Values in the shipping bill change due to the change in the Invoice for the following reasons:-

  • Change in Quantity:– Certain times the quantities are removed or added after the removal of goods from the factory but before the clearance of the goods at customs. In such cases, corresponding debit/credit notes should be raised according to the quantity and such debit/credit note may be added in GSTR-1
  • Change in Exchange rate:- Exchange rate changes between the date of Invoice and date of clearance of the goods. Due to this, there may be change. No change should be made on this account in the Invoices.
  • Finalization of Freight:– Sometimes the freight amount is finalized at the port only and at the time of removal only the tentative amount is filled. For this revised invoice/debit note should be issued or declared in GSTR-1.
  1. Different details in Shipping Bill and GSTR-1– Invoice details in GSTR-1 are filed and following details are being matched with the ICEGATE system and they should match identically.
  • Port Code
  • Invoice Number
  • Invoice Date
  • Shipping Bill Number
  • Shipping Bill date
  • IGST Amount

These details should be put into the GSTR-1 after checking them thoroughly with the shipping bill. IGST amount should match with the Invoice in the shipping bill.

There are various cases seen that where CHA’s system automatically calculates the IGST amount based on the taxable value (which is changed due to customs rate) and puts new IGST amount in the shipping bill. All the exporters should ask their CHA to stop this process and put IGST amount manually at the ICEGATE website so that it matches exactly with the amount given in the Invoice. If this amount does not match in future then there will be processing of refund by the customs department. This caution is very important for each exporter. 

  1. Bank Account not given at the GST registration:- All the bank accounts which are opened for drawbacks and refunds at the ports should be added to the GST registration.

Even then there may be cases where still the refunds are not being processed. In such cases, the exporters may reach their consultants for getting processed their refunds manually. Manual process can be easily done till 15.11.2018 at lease. There is the number of shipping Bills pending at the ports for processing of the refunds for one or other errors and in all such cases by doing some minor formalities, all of these refunds can be processed at the ports.  Some common errors which can be rectified are SB001, SB005 etc.

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