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

Input Tax Credit Claimable on Services, No Refund for Inverted Tax Structure; GST RCM Excluded from Turnover A person inquired about claiming Input Tax Credit (ITC) on GST paid at 18% for tender, license, and royalty fees, and whether a refund could be claimed due to an inverted tax structure, given the 5% GST on their output supply. Responses indicated that ITC can be claimed for input services but not refunded under the inverted duty mechanism, which applies only when input tax rates exceed output supply rates. SGST officers correctly denied the refund, as the GST paid under Reverse Charge Mechanism (RCM) is not part of the recipient's turnover but that of the service provider.