This circular provides clarification on the applicability of notifications issued under the CGST Act, 2017 for the purposes of levy, collection and refund of Compensation Cess under the Goods and Services Tax (Compensation to States) Act, 2017.

It clarifies that section 55 of the CGST Act empowers the Government to grant refund of taxes paid to specified persons such as UN agencies, notified international organizations, foreign diplomatic missions, consular posts, diplomatic agents and career consular officers. Notification No. 16/2017–Central Tax (Rate) dated 28.06.2017 was issued under this provision specifying such eligible entities.

The circular explains that section 11 of the Compensation to States Act makes the provisions of the CGST Act and IGST Act applicable to the levy and collection of Compensation Cess. Further, section 9(2) of the Compensation Act provides that for refund purposes, the provisions of the CGST Act and the rules made thereunder shall apply, except for the form to be filed. Accordingly, notifications issued under the CGST Act, other than those relating to tax rates or exemptions, are also applicable to Compensation Cess.

Based on this legal position, it is clarified that Notification No. 16/2017–Central Tax (Rate) is applicable for refund of Compensation Cess as well. Therefore, UN agencies, specified international organizations, foreign diplomatic missions or consular posts, and diplomatic or career consular officers are entitled to claim refund of Compensation Cess paid on intra-State and inter-State supplies received by them, subject to the same conditions and restrictions as prescribed for GST refunds.