REFUND OF ACCUMULATED GST-ITC

[SAFETAB LIFESCIENCE]

Dear Experts,

My query is on Refund application RFD-01 A

We are a pharma manufacturer and our outward supply final product is of 12 % GST. We buy about 200 raw materials, packing materials, consumables and availing so many services with different (almost all) rates of GST. In the application Statement 1 asks the following.

Refund on account of ITC accumulated due to Inverted Tax Structure

1. Turnover of inverted rated supply of Goods

2. Tax payable on such inverted rated supply of goods

3. Adjusted Total Turnover

4. Net Input Tax Credit

5. Maximum refund amount be claimed (1 x 4 / 3) - 2

I didn't understand the meaning for all four questions.

For Example :-

My Outward Sales Turnover 1,00,00,000

IGST payable @ 12 % 12,00,000

My Purchase Value 80,00,000

My Input Tax availed at different GST rates 15,00,000

What is my maximum Refund to be claimed ????

Amount eligible for Refund

Computed Value as per Statement ??????

Balance in Electronic Credit Ledger 3,00,000

Total Credit Availed 15,00,000

Eligible amount (Lowest of all) ????

What is the meaning for 'Adjusted Total Turnover'

What is the meaning for 'Net Input tax credit'

[Alkesh Jani]

Sir, refund on account of inverted duty structure is governed by Rule 89(5) of CGST Rules, 2017 and is as follows :-

"(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula -

Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods

Explanation.- For the purposes of this sub rule, the expressions “Net ITC” and “Adjusted Total turnover” shall have the same meanings as assigned to them in sub-rule (4)."

Now as per sub-rule (4) NET ITC and Adjusted Total turnover means :-

"Net ITC" means input tax credit availed on inputs and input services during the relevant period;"

"Adjusted Total turnover" means the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the value of exempt supplies other than zero-rated supplies, during the relevant period"

"Relevant period” means the period for which the claim has been filed".

The formula for refund is already given at Rule 89(5) of CGST Rules, 2017.

I hope this may clear your query, The Expert may correct me if mistaken.

AI Summary

Inverted tax structure refund: statutory formula ties refundable input tax credit to net ITC and adjusted turnover. Rule 89(5) CGST Rules, 2017 prescribes that the Maximum Refund Amount for inverted tax structure equals (Turnover of inverted rated supply of goods x Net ITC / Adjusted Total Turnover) minus tax payable on such inverted rated supplies. 'Net ITC' is ITC availed on inputs and input services during the relevant period; 'Adjusted Total Turnover' is turnover in a State or Union territory excluding exempt supplies other than zero rated supplies during the relevant period; 'relevant period' is the period for which the claim is filed.