Refund of Unutilized ITC under Inverted Duty Structure (IDS) for Solar EPC Companies

[DS Pal]

Dear sir,

We are a Solar EPC Company engaged in setting up of Solar Power Plant (SPGS System). The Solar power plant is taxable at effective rate of 13.80% i.e. (18% on Supply of Services (30%) and 12% on Supply of Goods (70%)). However, we procure our raw materials such as cables, structures etc at 18% due to which ITC remains unutilized in our E Credit Ledger.

Can we claim refund of unutilized ITC under Inverted Duty Structure?

If Yes, Please quote the reference of law or judgements. 

[Sadanand Bulbule]

Refer Issue ID No. 120458 for comprehensive reply.

[Shilpi Jain]

Yes. you should be able to claim refund.

[DS Pal]

Hi Maam, 

Is there any list of goods or services which are excluded from claiming the refund of unutilised credit under IDS?

If yes, pls share the link or reference.

Thanks

[Sadanand Bulbule]

 Section 54: Refund of unutilised/excess ITC by way of IDS is well settled.

Refer the following citations for judgements of the Honble Karnataka High Court: 

2025 (7) TMI 914 

2025 (5) TMI 538

AI Summary

Refund of unutilized ITC under inverted duty structure permits eligible suppliers to claim statutory refunds, subject to exclusions.
Refund of unutilized ITC is available where an inverted duty structure causes credit to remain unutilized in the electronic ledger; solar EPC companies procuring inputs at higher rates than the effective output tax may claim refund under the statutory refund provision. Exclusions for particular goods or services may apply under refund rules and administrative guidance, and judicial decisions have been cited supporting refund entitlement in IDS situations.