A GST registered person renders works contract service to private parties as well as government bodies. The applicable GST rates for this kind of service to private parties is 18% & to government it is 12% vide notification no.20/2017 dt:22/08/2017. The input materials suffer tax @ 18% & 28%. In this situation, is the registered person entitled to claim refund u/s 54 of CGST Act. If yes, is there any formula to arrive at the refund in view of two different rates for the same service with identical inputs.
Inverted Tax Rate - Refund
Ethirajan Parthasarathy
Can a GST-registered contractor claim a refund under Section 54 when providing services at different GST rates? A GST registered person provides works contract services to both private parties and government bodies, with applicable GST rates of 18% and 12% respectively. The input materials are taxed at 18% and 28%. The query is whether the person can claim a refund under section 54 of the CGST Act, given the different rates for the same service. The response suggests that if the services do not fall under entry 5(b) of schedule II, a refund is eligible using the formula in rule 89(5). It also advises considering inputs and capital goods for refund calculation, referencing a High Court decision. (AI Summary)