Adjusted Total Turnover for ITC refund calculation

[Narendra Soni]

Kindly suggest, whether sale value of below mentioned items will be included in" Adjusted Total turnover" for claiming refund of ITC accumulated on export of goods/services under Bond/LUT, in its formula:-

1.Sale of MEIS (Duty credit scrip issued by DGFT as incentive on export) on which GST rate is 0% (NIL rated)

2.Sale of Waste & Scrap of fire woods on which GST rate is 0% (NIL rated).

Kindly suggest at the earliest.

[YAGAY and SUN]

In our view there is no such need as first point relate to post export activity and second limb is associated with fire wood on which at any stage GST is not applicable.

[Narendra Soni]

Dear Sir, Thanks for expert view,

1.Both are exempted supplies.

2.Definition of "Exempt supply" (at sl.no.47 of CGST Act), includes Nil rated,Exempted against notification/circular and Non-taxable supply

3.Definition of "Adjustable Total Turnover" in refund formula:- Include all supplies except exempted supply.

Hence, being it would be "Exempt supply" as per definition of exempt supply, both the supplies are not included in Adj.Total Turnover for refund calculation.

Now question will arise whether we would required to reverse proportionate ITC availed on inward supply of goods and services against the Exempted supplie i.e.Nil rated / Exempted / Non Taxable supplies.

Kindly provide expert views as soon as possible.

[YAGAY and SUN]

In our view, not.

AI Summary

Exempt supply exclusion from adjusted turnover affects ITC refund calculation for exports under Bond/LUT, no reversal seen required.
Receipts from sale of MEIS duty credit scrips and firewood waste/scrap treated as nil rated, exempted or non taxable supplies fall outside the Adjusted Total Turnover for computing refunds of accumulated input tax credit on exports under Bond/LUT, and the consulted view is that proportionate reversal of ITC need not be made for such exempt receipts.