Excess GST Paid

[Kishan Barai]

When a company pay Excess GST to government i.e at the time of purchase raw materials 18% GST & at the time of sale 5% GST recovered from Customer

What are options available ??

Can excess GST paid could be use to pay IGST at the time of Imports ??

[KASTURI SETHI]

In construction service, overflow of ITC will lapse.

[Kishan Barai]

Thanks for replying

What about other then construction services ??

[KASTURI SETHI]

Actually in rates of GST for services against the construction service, the remarks,"No refund of overflow of ITC" have been given. When rate of input is higher and rate of output service is lower, ITC is to be accumulated so Govt. has given remarks. No such remarks against any other service has been found.

[KASTURI SETHI]

Sh.Kishan Barai Ji,

Virtually there is no bar in utilization of ITC. In case assessee is unable to utilize due to any reason, unutilized accumulated ITC would lapse. For example ; Closure of business and other factors.

Now in GST regime, ITC can be utilized in course or furtherance of business only. Hence in my view ITC cannot be used for even pre-deposit, and deposit of Govt. dues arising out of Order-in-Original, Order-in-Appeal, CESTAT's Order,Court's order etc. In pre-GST era, Cenvat credit was allowed for all such purposes.CESTAT used to accept pre-deposit through Cenvat account. Now the words, "In course or furtherance of business" have different connotation for the purpose of ITC. The whole scenario stands changed with an intent to plug the leakage of revenue.This will curb the ITC earned through fake docs, if any.

[Kishan Barai]

Thank You Sir Ji

[DR.MARIAPPAN GOVINDARAJAN]

If it is excess payment, it could not be adjusted against any sort of tax. It can be got refunded.

AI Summary

Exploring if excess GST from raw materials can offset IGST on imports; unused Input Tax Credit may lapse. A discussion on a forum addressed the issue of excess GST payment when a company pays 18% GST on raw materials but only collects 5% GST from customers. The primary question was whether the excess GST could be used to pay IGST during imports. Responses highlighted that in construction services, excess Input Tax Credit (ITC) lapses, and no refund is available. For other services, there is no explicit restriction on ITC utilization, but unused ITC lapses if not utilized. It was noted that excess GST payment cannot be adjusted against other taxes but can be refunded.