REFUND OF CREDIT LEDGER CLAIM DUE TO INVERTED DUTY STRUCTURE

[SAFETAB LIFESCIENCE]

Dear Experts,

We have applied and refund received of ITC availed/accumulated in Electronic Credit Ledger for the periods

of Aug-2017, Sep-2017, Nov-2017 and Dec-2017 in Feb/March, 2018.

Now, GST officials informed us that the refund received by us against INPUT SERVICES is not elgible for refund as per Notification No. 26/2018 dt. 13.06.2018 retrospectively effect from 01.07.2017.

Is it true. What does 26/2018 says ???

[Adarsh Gupta]

Yes, it is not allowed. This has been challenged in Gujrat High court..you may file an appeal if exposure is material.

[Nitika Aggarwal]

Dear Sir,

The aforesaid notification no. 26/2018-CT dated 13.06.2018 in respect of the same reads as under:-

"(iii) with effect from 01st July, 2017, in rule 89, for sub-rule (5), the following shall be substituted, namely:-

“(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 and services) x Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services.

Explanation:- For the purposes of this sub-rule, the expressions –

(a) Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and

(b) Adjusted Total turnover shall have the same meaning as assigned to it in sub-rule (4).”

Now accordingly you can check the validity of same in your case.

Regards

Nitika Jindal

9999804960

AI Summary

Refund of input tax credit under inverted duty structure limited by formula, net ITC proportion minus tax payable. Maximum refund is computed as (turnover of inverted rated supplies x Net ITC / Adjusted Total Turnover) minus tax payable on such inverted rated supplies. Net ITC means input tax credit availed on inputs during the relevant period other than credit availed for which refund is claimed under specified sub-rules; Adjusted Total Turnover has the same meaning assigned in the rule.