Whether refund of IGST paid on Export of goods &refund of Inverted tax for same tax period by taxpayer is allowed? Cir. N.125 dt.18.11.19-Declaration in Anx-A Sr. No.5 restricts refund simultaneously

[Niketan Dhumal]

Brief and Query:

Brief as under:

• Exporter has inputs taxed at 18%, output export at 12% IGST(Paid)
• Exported has claimed IGST Refund of 12% and same has been received
• Exporter has ITC accumulated due to inputs at 18% and output at 12% (inverted tax)
• Now, exporter claimed the refund under Inverted tax ((under section 54(3)(ii))
• Dept. rejected refund on ground of declaration under Cir. No.125 dt 18.11.2019.
• Circular Mandates declaration to be filed for refund claimed under section 54(3)(ii)
• declaration content as under: Second Proviso to section 54(3) - I hereby declare that the goods exported are not subject to export duty, I also declares that I have not availed any drawback of Cen excise duty/service tax/ Central tax on goods of both and that I have not claimed refund of the IGST paid on supplies in respect of which refund is claimed.

Questions :

1. Request to provide expert view on above query with relevant provisions, Case Law, Advance ruling if any
2. Whether declaration as specified under Sr. No.5 of Annexure-A of Circular 125 dt 18.11.2019 is mandatory for refund claim filed under clause ii) of section 54(3) ( Inverted tax ) ??
3. Third proviso to section 54(3) ' Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the IGST paid on such supplies' - whether this is applicable to section 54(3)(ii) also (section 54(3(ii) - is for refund claim of inverted tax ) ??
4. Our View - If the Accumulated ITC from input tax on inputs (e.g. 18& inputs), and the IGST Claim of 12% is only related to output tax(12%) exports, then we can still be eligible for inverted tax refund under clause ii) of section 54(3) for the unutilised ITC of 6%, as long as there is no double claim on same ITC portion. Whether our argument is proper according to relevant provision of law ??

AI Summary

Exporter denied inverted tax refund under section 54(3)(ii) despite receiving separate IGST refund on procedural grounds An exporter with inputs taxed at 18% and exports at 12% IGST received refund of paid IGST but was denied inverted tax refund under section 54(3)(ii) due to non-compliance with declaration requirements under Circular 125/44/2019. The department cited the third proviso restricting simultaneous refunds. Legal experts argued the rejection was unsustainable as the IGST refund pertained to output tax while inverted tax refund concerned accumulated input credits with no overlap. They contended the circular's declaration requirement was procedural and couldn't override statutory entitlements, citing precedent that refunds under inverted duty structure remain permissible absent double benefit claims.