Refund of ITC on export of liquor

[KARAN VERMA]

Dear Sir, i am exporting liquor which is Non GST goods. Now, Govt. has issued circular dated 18-11-2019 no. 125/44/2019 that if assessee export exempted or Non GST goods then he is eligible for refund of ITC.

My question whether i am eligible to take ITC on purchase of export packaging material and CHA agent services bill. Kindly clarify.

[Rajagopalan Ranganathan]

Sir,

As accepted by you liquor is Non-GST goods. Therefore input tax credit of tax paid on packing material is not allowed under GST Law. Hence the question of giving refund of tax paid on packing material does not arise. Though para 3 (l) of the circular mentioned by you permit filing of refund claim on account of “any other” ground or reason the refund sanctioning authority will not entertain such refund application. Moreover circulars issued by CBIC cannot override the provisions of CGST Act or rules made thereunder. Therefore in my opinion you cannot claim the refund of input tax credit of tax paid on the packing materil used for export of liquor.

[Rajendra Prasad]

Dear Mr Karan,

There are chances that you can get refund. Refund of ITC is applicable on Exempt Goods. The main reason for refund is to reduce the tax incidence there by exports become more competitive. You can represent that Exempt Supplies includes Non GST Supplies also.

AI Summary

Refund of input tax credit: whether taxes on packing and CHA services for non GST exports can be reclaimed. Refund entitlement of input tax credit for export of liquor treated as non GST supplies is disputed. One view holds that ITC on packing material and related services is not allowable under the statutory GST framework and administrative circulars cannot override the statute, precluding refund. Another view argues that refund mechanisms for exempt supplies could be extended to non GST exports to reduce tax incidence, supporting a claim for refund of taxes on packing material and CHA services.