Refund under inverted structure

[Asked by Guest]

Dear sir,

Understand that, There is time limitation for claiming refund under inverted structure refund as 2 years from from the end of tax period for which the refund is sought.

Our case, falling under inverted duty structure. Whereby for refund eligibility, the input services and capital goods will not considered.

Considering the formula under rule 89(5), our ITC on inputs is very less considering the inverted duty liability. Resulting, the refund eligibility is arrived to nil..

Though we have excess ITC on services, the textile industry not in a position to use it.

This is an undue hardship faces the industry and working capital also badly impacting.

My question.

a. Any remedy available to overcome this issue.

B.after the period of 2 years, whether the ITC can be carry forwarded for future adjustment.

C. Pls share the outcome of the rajantan high court on the writ petition filed on 89(5).

D. How to resolve the WC issues.

Your reply will be more helpful for taking the final decisions.

With rwgards

Natarajan

AI Summary

Refund under inverted duty structure: limited refund and non carryforward of unutilised input tax credit after prescribed period.
Rule 89(5) restricts refunds in inverted duty structures by excluding input services and capital goods credits from the refund formula, leaving unutilised service credit; Section 54 and its explanations confine the relevant date and period for claiming refunds, preventing indefinite accumulation or carryforward, and taxpayers may challenge Rule 89(5) judicially while administrative representation is an alternative.