Section 54 of the Central Goods and Services Tax, 2017 (‘Act’ for short) provides the procedure for the refund of tax.  Section 54(5) provides that the proper officer, on receipt of refund application, is satisfied that the whole or part of the amount claimed as refund is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund referred to in section 57.

Consumer Welfare Fund

Section 57 provides that the Government shall constitute a Fund, to be called the Consumer Welfare Fund.  There shall be credited to the Fund-

• The amount referred to in section 54(5); 
• any income from investment of the amount credited to the Fund; and
• such other monies received by it

in such manner as may be prescribed.

Rule 4(4) provides that where the proper officer is satisfied that the amount refundable is not payable to the applicant under section 54(8) he shall make an order in Form GST RFD 06 and issue an advice in Form GST RFD – 05 for the amount of refund to be credited to the Consumer Welfare Fund.

Section 54(8) of the Act provides that notwithstanding anything contained in sub-section (5) the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is related to-

• refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies;
• refund of unutilized input tax credit under sub-section (3);
• refund of tax paid on a supply which is not provided, either wholly or partially, and for such invoice has not been issued, or where a refund voucher has been issued;
• refund of tax in pursuance of section 77;
• the tax and interest, if any, or any other amount paid by the applicant, if he has not passed on the incidence of such tax and interest to any other person; or
• the tax or interest borne by such other class of applicants as the Government may, on the recommendation of the Council, by notification, specify.

Rule 8 (1) provides that all credits to the Consumer Welfare Fund shall be made under Rule 4(4).

Utilization of Fund

Section 58(1) provides that all sums credited to the Fund shall be utilized by the Government for the welfare of the consumers in such manner as may be prescribed.

Rule 8(2) provides that any amount, having been credited to the Fund, ordered or directed as payable to any claimant by orders of the proper officer, appellate authority or Appellate Tribunal or court, shall be paid from the Fund.

Rule 8(4) provides that the Central/State Government shall, by an order, constitute  a Standing Committee which shall make recommendations for proper utilization of the money credited to the Consumer Welfare Fund for the welfare of the consumers.

Rule 8(3) provides that any utilization of amount from the Consumer Welfare Fund shall be made by debiting the Consumer Welfare Fund account and crediting the account to which the amount is transferred for utilization.

Standing Committee

The Standing Committee shall constitute a Chairman, a Vice-Chairman, a Member Secretary and such other members as it may deem fit.  The Committee shall meet as and when necessary, but not less than once in three months.

Powers of the Standing Committee

Rule 8(8) provides that the Committee shall have the powers-

• to require any applicant to produce before it, or before a duly authorized officer of the Government of such books, accounts, documents, instruments or commodities in custody and control of the applicant, as may be necessary for proper evaluation of the application;
• to require any applicant to allow entry and inspection of any premises, from which activities claimed to be for the welfare of the consumers are stated to be carried on, to a duly authorized officer of the Central Government or, as the case may be, State Government;
• to get the accounts of the applicants audited, for ensuring proper utilization of the grant;
• to require any applicant, in case of any default, or suppression of material information on his part, to refund in lump sum, the sanctioned grant to the Committee, and to be subject to prosecution under this Act;
• to recover any sum due from any applicant in accordance with the provisions of the Act;
• to require any applicant, or class of applicants to submit a periodical report, indicating proper utilization of the grant;
• to reject an application placed before it on account of factual inconsistency, or inaccuracy in materialparticulars;
• to recommend minimum financial assistance, by way of grant to an applicant, having regard to his financial status and importance and utility of nature of activity under pursuit, after ensuing that the financial assistance provided shall not be misutilized;
• to identify beneficial and safe sectors, where investments out of Consumer Welfare Fund may be made and make recommendations, accordingly;
• to relax the conditions required for the period of engaged in consumer welfare activities of an applicant;
• to make guidelines for the management, administration and audit of the Consumer Welfare Fund.

Applications for grant

Rule 8 provides that the Central Government or the State Government may make an application for a grant from the  Consumer Welfare Fund for-

• any agency or organization engaged in consumer welfare activities for a period of three years registered under the Companies Act, 2013 or under any other law for the time being in force, including village or mandal or samit level co-operatives of consumers especially Women, Scheduled Casts and Schedule Tribes; or
• any industry as defined in the Industrial Disputes Act, 1974 recommended by the Bureau of Indian Standards to be engaged for a period of five years in viable and useful research activity which has made, or is likely to make, significant contribution in formulation of standard mark of the products of mass consumption.

The proviso to Rule 8 provides that a consumer may make application for reimbursement of legal expenses incurred by him as a complainant in a consumer dispute, after its final adjudication.

All applications for grant from Consumer Welfare Fund shall be made by the applicant Member Secretary.  The Committee shall not consider an application, unless it has been inquired into in material details and recommended for consideration accordingly, by Member Secretary.

Maintenance of accounts

Section 58(2) provides that the Government or the authority specified by it, shall maintain proper and separate account and for other relevant records in relation to the Fund and prepares an annual statement of accounts in such form as may be prescribed in consultation with the Comptroller and Auditor-General of India.

Guidelines

Rule 8(9) provides that the Central Consumer Protection Council established under the Consumer Protection Act and the  Bureau of Indian Standards shall recommend to the GST Council, the broad guidelines for considering the projects or proposals for the purpose of incurring expenditure from the Consumer Welfare Fund.