Refund of credit accumulated due to tax rate difference

[Mr Rao]

sir,

A party has filed application for refund of credit accumulated due to tax rate difference under GST. The party's inputs attract higher rate of duty than the rate of duty attracted on his output and thus he accumulated credit. Is he eligible for refund in cash under GST. As of now GST portal for refunds is not working and hence filed manually for sanction of refund. Is he eligible for the refund of the amount in cash even if he files manually. What is the time period for sanction of the same and under what provisions ? What are the documents need to be verified for sanction of the refund ? Experts, Pl.throw light on this subject as it is confusing. Somebody is telling that such refund to be sanctioned within 7 working days.

[ANITA BHADRA]

Dear Sir

Just confirm , your client has exported goods / services and accumulated credit is due to rate difference . If yes ,Procedure of Manual filing of Refund under GST regime is mention in circular no. 17/2017 and Notification No. 55/2017 DT. 15/11/2017.

The procedure is only for those who export goods/services using LUT/Bond, without payment of IGST and having unutilized input credit.

[Mr Rao]

Dear madam,

The issue is not concerned with any export. The accumulation is with regard to GST compensation cess which is paid by the party for getting their input coal for manufacturing their output product. This accumulation of GST compensation cess, the party is requesting for refund.

[CSSANJAY MALHOTRA]

Mr. Rao,

Input Tax Credit is available in respect of cess if the same is applicable/ leviable on your final product. Do confirm the same to revert accordingly.

[Mr Rao]

Dear experts,

Thank u very much for your prompt response. It indeed enriched my knowledge.

AI Summary

Refund of input tax credit: cash refund eligibility hinges on whether compensation cess is leviable on the final product. A taxable person applied for cash refund of accumulated input credit from a tax rate difference and filed manually while the portal was down. Circular no. 17/2017 and Notification no. 55/2017 provide a manual refund procedure but only for exporters using LUT/bond without payment of IGST with unutilized input credit. Accumulation due to compensation cess requires that input tax credit of cess is available only if the cess is leviable on the final product; entitlement to refund of such cess depends on that condition. Time limits and documentary verification requirements are not resolved in the exchange.