Refund under GST Act

[THYAGARAJAN KALYANASUNDARAM]

Dear Experts,

One of my client's importing goods and paying IGST regularly on the value fixed by the customs authority. Whereas while selling the same goods in the market its less than the value fixed by the customs authority. Due to which huge ITC got accumulated and as and when goods are imported he will sell it immediately and without retaining any stocks.

My query is that, how do we get the refund for the Excess ITC available which is not inverted duty or Zero Rated Sales?

What to do in this case.

Thanks in Advance.

[Rajagopalan Ranganathan]

Sir,

If the IGST paid on import is higher than tax payable for supply within India then it will be inverted duty structure. You are eligible for refund provided the refund is payable as per the notification issued. Input credit is eligible for refund only when the final product is exported out of India under LUT without payment of tax. If you supply the imported goods for consumption within India it will not constitute export and you are not eligible to claim refund of unutilised ITC. You have to forgo the excess ITC or utilise the same for discharging tax on outward sale.

[Venkataprasad Pasupuleti]

Dear sir,

Why valuation fixed by customs authority is high?

AI Summary

Inverted duty structure: refund of excess input tax credit limited to exported final products under specified conditions.
Excess ITC from IGST paid on import that exceeds tax on domestic supply constitutes an inverted duty structure; refund of such excess is available only under the specified refund notifications and, critically, only where the final product is exported under LUT without payment of tax. Domestic supplies do not qualify for refund of unutilised ITC, so the excess credit must be forgone or used to discharge outward tax liabilities.