REFUND OF IGST PAID AGAINST IMPORT OF CAPITAL GOODS

[RICHA RICHA]

Sir

We had business for Dyeing & Printing of Textile fabric, now we planning to purchase Digital Printing Machine from Italy, Pls reply below points:

1. Can we refund IGST Paid on imported capital goods.

2. Is there any different cases for IGST Refund like- A.) Inverted Duty Structure or, B.)Zero -Rated Supplies made without payment of tax.

3. In case of Jobwork - refund applicability?

4.In case of Fabric Sale - refund applicability?

[ANITA BHADRA]

You are planning to Import Capital Goods which will be used for your business in India .

Refund of IGST paid on Imported Goods can not be claimed.

You can take ITC on Capital Goods Purchased

Input Tax Credit will be provided in totality where Capital Goods have been used for effecting taxable supplies and business activity without any restrictions

Capital Goods Sent on Job Work
Where capital goods including plant & machinery have sent to a job worker for job work, the credit of input tax shall be allowed to the principal manufacturer.
Such goods must be received back within a period of 3 years of sending out or else it shall be treated as supply on the date on which goods was earlier send and tax would be payable along with interest for late payment of taxes

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Ms. Anita

[Nitika Aggarwal]

In case of fabric sale, the Central Government hereby makes the amendment in the notification no. 05/2017-CT(Rate) dated 28.06.2017 via Notification No. 20/2018-CT (rate) dated 26.07.2018 wherein the proviso related to the refund of accumulated ITC on fabrics has been inserted and relevant extract of the aforesaid notification has been provided as under:-

“Provided that,-

(i) nothing contained in this notification shall apply to the input tax credit accumulated on supplies received on or after the 1st day of August, 2018, in respect of goods mentioned at serial numbers 1, 2, 3, 4, 5, 6, 6A, 6B, 6C and 7 of the Table below; and

(ii) in respect of said goods, the accumulated input tax credit lying un-utilised in balance, after payment of tax for and upto the month of July, 2018, on the inward supplies received up to the 31st day of July 2018, shall lapse.”.

A total number of 10 categories of fabric covered in the notification on which refund on account of inverted duty structure is allowed.

Thereafter department vide circular no. 56/30/2018-GST dated 24.08.2018 has clarified issues regarding removal of restriction of refund of accumulated ITC on fabrics.

In the instant case, as provided by your goodself, if the sale of your fabric covered under the abovementioned 10 categories, then you are eligible to claim the accumulated ITC if any on and after 01.08.2018 as credit related to input prior to that has already been lapsed.

AI Summary

Input Tax Credit on imported capital goods available; refund of IGST on import not permitted; jobwork and fabric rules apply.
Refund of IGST on import of capital goods is not available; taxpayers must claim Input Tax Credit on imported capital goods used for taxable supplies. Capital goods sent for job work permit credit to the principal manufacturer, subject to return within the prescribed period or else treated as supply with tax and interest. For fabric sales under inverted duty structure, an amendment restricts refund for specified fabric categories for supplies received after the cut off and provides that accumulated unutilised input tax credit may lapse; departmental clarification addresses removal of certain restrictions and claimability rules.