Refund of accumulated ITC due to supplies @0.1% GST merchant exporters

[MohanLal tiwari]

Dear Panelists,

We are manufacturing & supplying goods to merchant exporters @ 0.1%, Railway parts @5% and others @18%. Due to maximum supplies to merchant exporters and railways, the ITC is getting accumulated day be day.

Kindly advise whether we should claim refund of accumulated ITC on account of supplies to merchant exporters, if so how we can segregate the ITC against ITC taken for manufacturing of export or railway goods if some of the inputs are common for all.

[KASTURI SETHI]

In GST era, the concept of 'merchant exporter' has lost its relevance. Now there is no difference between the terms, 'Manufacturer Exporter' and 'Merchant Exporter' for the purpose of export.. The procedure in respect of the supplies made for export is same. You can claim refund of accumulated credit, being maximum supplies for export. Regarding segregation, you may consult CMA. He can certify the data.

[MohanLal tiwari]

Thanks Kasturi Sir,

For us, the Merchant exporter is buyer who is procuring materials from us for export and registered for the purpose and paying us GST @ 0.1%. For the direct exports, we are charging full GST and getting refund also.

Please advise for refund wherein goods are supplied by us charging GST @0.1% for export through merchant exporter.

[Rajagopalan Ranganathan]

Sir,

According to Section 54 (3) (ii) of CGST Act, 2017 'where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council." :

Since you are paying more tax on inward supply of materials procured by you and your out put tax rate is less than the rate tax paid on inward supplies you can claim refund due to the reason of inverted tax rate.

[Ganeshan Kalyani]

Refund can be claimed for excess input tax credit accumulated on account of less output tax payable. And as regard segregation of input tax credit into input proportionate to supply @0.1%, export and regular supply, you may resort to turnover ratio.

[Nandan Khambete]

Yes, refund by way of Inverted Tax structure can be claimed certainly. My client is claiming since October 2017 and tefund are sanctioned without any issue.

AI Summary

Manufacturing company seeks ITC refund under Section 54 CGST Act due to export-related accumulation. Consult CMA for guidance. A manufacturing company supplying goods to merchant exporters at 0.1% GST, railway parts at 5%, and others at 18% is experiencing accumulated Input Tax Credit (ITC) due to high volumes of exports. They seek advice on claiming refunds for this accumulated ITC, especially when some inputs are common across different products. Responses indicate that refunds can be claimed under the inverted tax structure as per Section 54 of the CGST Act, 2017. Suggestions include consulting a Cost Management Accountant (CMA) for data certification and using a turnover ratio for ITC segregation.