GST REFUND

[Suraj Bajaj]

1. WE EXPORTED LEATHER GOODS, GST RATE ON LEATHER IS IS 5%. HOWEVER CHEMICAL USED IN PROCESS IS AT RATE OF 18%. IF I CHARGE IGST ON BILL THEN I ELIGIBLE FOR GST REFUND OF 5%. THEN AGAINST SAME BILL I AM NOT ABLE TO FILE APPLICATION UNDER INVERTED STRUCTURE. IS ANY OPTION AVAILABLE TO FILE REFUND OTHER THEN GOODS EXPORTED UNDER LUT.

2. PLEASE SUGGEST WHILE FILLING REFUND UNDER LUT, GOODS EXPORTED WITHOUT PAYMENT OF TAX. DEPARTMENT DISALLOW CLAIM ON CAPITAL GOODS & SERVICES. DUE THIS HUGE AMOUNT OF CAPITAL BLOCKED. ANY WAY TO GET REFUND OF CAPITAL GOODS/ SERVICES. AS ASSESSE IS FILLING REFUND EVERY MONTH & EVERY MONTH INPUT IS EXCESS THAN OUTPUT LIAB. ANY SUGGESTION.

[Venkataprasad Pasupuleti]

Section 54 (3) of CGST act, 2017 restricts simultaneous claim of refund of ITC (due to inverted duty) & exports with IGST payment. You can shift to LUT option wherein inputs & service ITC is refundable and the ITC on capital goods is also legally contestable to get the refund.

You can look at procuring without GST from the suppliers against advance authorisation/Epcg license thereby you can arrest the ITC accumulation and exhaust the existing ITC.

[Kashish Gupta]

Dear Suraj Bajaj Ji,

In my view, you can claim refund under inverted duty structure even if goods are being exported on payment of integrated tax. The third proviso to section 54(3) to Central Goods and Services Tax Act, 2017 has no application for claiming refund under inverted duty structure with corresponding claim of refund when the goods are exported on payment of IGST after 30.09.2017. We have dealt with various cases and have been able to convince jurisdictional authorities.

Nevertheless, refund after exporting goods under LuT is allowed and under that option refund of input as well as input services is available [Refer rule 89(4) of Central Goods and Services Tax Rules, 2017].

[CSSANJAY MALHOTRA]

Dear Mr. Suraj,

Seems you are not able to put across your query correctly. As per query raised, GST on Leather (Input for you) is 5%. Further, you Export leather goods (FG- Output) on payment of IGST @5% (Don't know which product you export). Where is the question of Inverted Duty Structure??? Please validate above and if the above is correct, then you get answer to Chemical consumption in process.

AI Summary

GST refund restriction on simultaneous inverted-ITC and IGST export claims; LUT exports allow input and service refunds. Section 54(3) restricts simultaneous refund claims of inverted duty ITC and refunds for exports made on payment of IGST; exporting under Letter of Undertaking allows refunds of input tax credit on inputs and input services and permits contesting ITC on capital goods, while procurement under advance authorisation or EPCG can prevent further ITC accumulation.