Refund under inverted duty structure

[Kaustubh Karandikar]

In the formula of refund under inverted duty structure, the taxable person had considered the turnover of both manufactured and trading items and ITC of both manufacturing and trading items. The GST authorities had objected saying that figures of trading items cannot be considered in this formula. Views of the experts please.

AI Summary

Inverted duty structure eligibility can include trading turnover when input tax credit accumulation arises, affecting refund calculation.
The dispute examines whether turnover and input tax credit from trading activities must be included in the refund computation under the inverted duty structure formula. The formula bases maximum refund on turnover of inverted rated supplies, Net ITC and Adjusted Total Turnover, and the key inquiry is whether trading transactions causing genuine ITC accumulation (for example where input rates exceed output rates) qualify to be included, while trading with identical input and output rates would not meet the inverted duty criterion.