Refunds - balance in E Ledger

[S RAMAN]

We are paying 28% for our rawmaterials. GST for finished products is only 18% and there is credit in electronic ledger. What we need to know whether we have to apply for refund - if so when ?

[DR.MARIAPPAN GOVINDARAJAN]

In my view in your case no refund is possible.

[Rajagopalan Ranganathan]

Sir,

According to Section 54 (3) (ii) of CGST Act, 2017 "Subject to provisions of Section 54 (10) of CGST Act, 2017 a registered person may claim refund of any unutilised input tax credit at the end of any tax period where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council."

The refund application shall be made within two years from the 'relevant date'. According to Explanation 2 (e) of Section 54 of CGST Act, 2017 the 'relevant date' in the case of refund of unutilised input tax credit under sub-section (3), the end of the financial year in which such claim for refund arises.

[KASTURI SETHI]

Dear Querist,. You fall in the exclusion Clause. It is also mentioned in ITC notification to the effect that refund on account of outflow is not allowed. However, it can be used for any taxable supply of goods and services. In these sub-sections so many 'ifs' and 'buts' are involved. In real sense or practically not permitted. One has to read sub sections word for word along with ITC notification issued originally in order to arrive at correct decision. Whatever you have depicted in your query, on that basis refund is not admissible.

[Nash Industries I Pvt Ltd]

Refund is allowed. Please refer to second proviso to Section 54(3) of the CGST Act

It says refund of unutilised input tax credit is allowed under the following situations:

1. Zero rated supplies made without payment of tax

2. where the credit accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempted supplies).

Regards

S.Ramaswamy

AI Summary

Refund of unutilised input tax credit permitted where input tax rate exceeds output rate; claim within statutory time limit.
A registered person may claim refund of unutilised input tax credit that accumulated because input tax rates exceed output tax rates, except for nil rated or fully exempt supplies and notified exclusions; the refund must be applied for within the statutory period and, for such unutilised credit, the relevant date is the end of the financial year in which the claim arises.