TaxTMI 
TaxTMI 
My client recently constructed Cotton process Mill and acquired Plant and Machinery. On the Plant and machinery, he has paid ₹ 50.00 lakhs as GST. As he is dealing with cotton and buying raw cotton from farmers, he liable to pay GST under RCM u/s 9(3). So he is liable to pay to tax under RCM on Cotton purchases every month and claims ITC as usual. In the situation major portion of ITC on Plant & Machinery becoming idle. Can we claim ITC on Plant and Machinery as refund U/s 54? If there is no possibility to claim ITC, then how to over come the situation?
Refund u/s 54
20 Dec 2021 
8 Replies 
2660 Views Asked by
Input tax credit on capital goods not refundable; usable against taxable outward supplies or exports, or capitalise instead.
Refund is not available for ITC on plant and machinery where reverse charge applies; such ITC must be used in the course or furtherance of business. Unutilised capital goods credit can be applied against taxable outward supplies (including manpower services), used for export/SEZ supplies with payment of tax to claim rebate, or capitalised into the asset and claimed as depreciation. Industry representation to policy forums is a recommended route for systemic relief. (AI Summary)
Refund is not available for ITC on plant and machinery where reverse charge applies; such ITC must be used in the course or furtherance of business. Unutilised capital goods credit can be applied against taxable outward supplies (including manpower services), used for export/SEZ supplies with payment of tax to claim rebate, or capitalised into the asset and claimed as depreciation. Industry representation to policy forums is a recommended route for systemic relief. (AI Summary)