ITC ON ROYALTY,LICENSE FEE,TENDER FEE

[MUKESH SAXENA]

A person paid @ 18% on Tender Fee,License Fee and roylaty for khanan from river to khanan deptt and vikas nigam and he also pay GST @ 5% for Outpur Supply of RBM.

1- Can he claim ITC

2- If he claim refund of difference amount ITC-Output by inverted structure

3- SGST Deptt Officers are denying for refund, they are saying this activity by khanan deptt and vikas nigam is a service provided to you that comes under SAC-997337 means Licensing Service for Right to use minerlas including its exploration evaluation, So you are not eligible to take and refund ITC.

Please Suggest

Thanks

[Amit Agrawal]

While the tax-payer can claim ITC against GST@18% paid against 'input services' received, it cannot claim any refund there-against (under duty inverted mechanism) just because of the fact that GST@5% is leviable against his outward supply of goods.

Refund under duty inverted mechanism u/s 54(3) works only where the credit has accumulated on account of rate of tax on inputs (i.e. not input services or capital goods) being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies).

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

Dear Querist,

SGST Officers are absolutely correct in denying refund claim under Section 54(3)(ii) of the CGST/SGST Act. GST @18% has been paid under RCM. So the said person is deemed service provider under Section 9(3) of CGST Act and not actual supplier. The taxable value on which GST has been paid under RCM is not recipient's turnover. Such turnover will be accounted for in the books of account of mining department who has given (supplied) Licensing Service for Right to use minerals including its exploration.

Hence not eligible for refund.

Disclaimer : These are my personal views for education purpose only and not meant for any court proceedings.

[Sadanand Bulbule]

Dear querist

I absolutely endorse the views of the Ld. experts.

AI Summary

Reverse Charge Mechanism denies inverted-duty refunds when tax paid as recipient is excluded from recipient turnover.
Input tax credit may be claimed for GST paid on input services under reverse charge, but refund under the inverted duty mechanism is unavailable where accumulated credit arises from input services or capital goods rather than inputs. When tax is paid under reverse charge and the recipient is treated as a deemed service provider, the taxable value on which tax was discharged under reverse charge is not treated as the recipient's turnover for purposes of inverted-duty refunds, supporting denial of refund claims.