Refund under Inverted Tax Structure in case of multiple business

[Sumeet Tholle]

Dear Sir,

We are having 2 business(activities) under one GSTIN.

In one trading activity input & output rate are same but in other manufacturing activity, input rate is 28% (mollasses) & output rate is 5% and hence there is accumulation of ITC.

Now, we filed refund under Inverted Tax Structure and we considered 'Net ITC' as ITC of inputs only of both activities. But the officer asked to remove ITC of inputs of trading activity but considering 'Adjusted Total Turnover' as Turnover of both activity i.e. trading as well as manufacturing.

As per formula, refund=(Turnover of inverted rated supply of goods & services/Adjusted Total Turnover )*Net ITC-Tax payable on inverted rated supply of goods & Services

Here the Net ITC means ITC availed on inputs i.e ITC of inputs of that GSTIN.

As per formula, our claim is correct.

Request for expert guidance.

Thanks.

AI Summary

Business Faces GST Refund Issue Due to Inverted Tax Structure, Officer's Approach May Lead to Litigation Under GST Rules. A business with two activities under one GSTIN is facing an issue with claiming a refund under the Inverted Tax Structure. The manufacturing activity has an input rate of 28% and an output rate of 5%, leading to accumulated ITC. The business filed for a refund considering the Net ITC of both activities, but the officer requested the exclusion of ITC from the trading activity while including both activities' turnover. The formula for refunds involves the turnover of inverted rated supplies and Net ITC. Experts suggest that the officer's approach is incorrect and litigation might be necessary for resolution.