Inverted duty refund

[KARAN VERMA]

Sir

I am manufacturing tractors and sold at 12%, now at present I am taking three type of refunds -

1. Refund from custom- Tractors export with 12% IGST payment

2. Refund from GST - Tractors export without GST

3. Inverted duty refund - Because inputs for tractors falls under 28% and 18% and output attract 12 %. Therefore, in case of domestic sale, I claim inverted refund.

Now, GST department said you are not eligible for refund of any claim because you are taking refund of IGST paid on export of tractors and as per second Proviso to section 54(3), you are not eligible.

Section 54(3) -Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

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AI Summary

Tractor Manufacturer Seeks GST Refunds; Expert Advises Limited Eligibility Due to Section 54(3) Restrictions on Exports A manufacturer of tractors sought clarification on claiming refunds under the GST regime. The manufacturer exports tractors with a 12% IGST payment and domestically sells them at a 12% rate, with inputs taxed at 28% and 18%. The GST department denied refund eligibility due to the second proviso to Section 54(3), which restricts refunds when IGST is claimed on exports. An expert advised that refunds for inverted duty structure are possible for domestic sales, but not for exports with IGST. The expert suggested addressing the issue with the GST Council or filing a writ petition in the High Court.