Inverted Duty Structure Refund

[Ranjith Reddy]

Provision

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

Situation

However in our situation there are outward supplies (Rates 5,12,18,28) and inward supplies (Rates 5,12,18,28) which are taxed at multiple rate of taxes and also the output liability is less than inputs(ITC).

Question

Kindly advise in my case the refund under inverted duty structure is valid?

[KASTURI SETHI]

What are your products ? Have you composite supplies ?

[KASTURI SETHI]

As per Section 54 (3)(ii) of CGST Act

(ii) 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 :

In my view, you are entitled to refund claim provided you prove that in respect of some goods cleared by you, attracted lower rate on final products because of multiple tax rates. Further, in my view CMA's certificate can help you in this aspect.

[Ranjith Reddy]

No we are not composite dealer, we are manufacture of Tractor and tiller products.

[KASTURI SETHI]

My reply remains the same. However, I would like to mention here that 'Composition Dealer' and 'Composite supply' are different terms.

[SHARAD ANADA]

You are eligible for refund of duty inverted structure

Please refer circular 79/53/2018-GST dated 31.12.2018 para 4

AI Summary

Inverted duty structure refunds available where input tax exceeds output tax, subject to proof and statutory exclusions. Refunds for inverted duty structure apply where input tax rates exceed output tax rates, excluding nil rated or fully exempt supplies and notified exceptions; claimants must demonstrate that particular outward supplies attracted lower tax than their inputs and may use a CMA/CA certificate to verify accumulated input tax credit for those goods.