GST Input Credit

[Ethirajan Parthasarathy]

A supplier is engaged in business of knitting and fabric manufacture.

For supply of fabric the GST output rate is less than input tax paid for inputs.

Till 27-07-18 the supplier was taking tax credit of full input tax credit for all inward purchase /services against out tax payable on knitting (labor charge) and fabric sale.

As per notification No 20/2018-Central Tax (Rate) dated 26.07.2018 date of CGST (Rate) the unutilized input tax on certain inputs for fabric activity available as o 31-08-18 will LAPSE.

I am of the opinion that the above notification regarding Lapsing is applicable for limited purpose of claiming refunds only.

The supplier concerned is still eligible for taking input credit of balance available as on 31-07-18 against output tax knitting and fabric sale from 1-08-18

Is my view correct

AI Summary

GST input tax credit lapse may restrict utilization against outward supplies; industry seeks clarification on refund versus utilization.
A supplier questions whether Notification No. 20/2018, which causes lapse of certain unutilized input tax credit accumulated up to the cut-off, applies only to refund eligibility or also to ordinary utilization against output tax on knitting and fabric supplies; experts give conflicting views and an industry chamber has sought official clarification.