Refund of Inverted Duty

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my clients selling specified goods to R&D Govt. Dept and charge @ 5% GST as per the notification no.45/2017 dated 14.11.2017 - Central Tax(Rate) whereas he purchases at higher rate of tax 12% & 18%.

Now, my query is that, will he be apply for refund u/s 54 of GST Act, for the un-utilized ITC and would be treated as Inverted Duty structure?

Thanks in Advance.

[KASTURI SETHI]

Answer is yes.

[Shilpi Jain]

Please note that refund would not be of the un-utilised ITC effectively for the reason that refind of input services and capital goods would not be eligible. It is only w.r.t. the inputs. Though there are certain writs filed in this regard.

[KASTURI SETHI]

Re-examined the issue. I agree with the views of Shilpi Jain Ji.

AI Summary

Inverted duty structure refunds may allow recovery of unutilised input tax credit, excluding services and capital goods.
The supplier may pursue a refund for an inverted duty structure where outward tax is lower than tax on acquisitions, but such refund is confined to unutilised input tax credit on inputs and excludes input tax credit on input services and capital goods; some writ petitions have been filed challenging this narrower eligibility.