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. 

AI Summary

Solar EPC Contractor Eligible for Refund of Unutilised ITC Under Section 54 for Inverted Duty Structure on Taxable Supplies A solar EPC contractor supplying a composite solar power plant may be eligible for refund of unutilized input tax credit where the effective tax rate on inputs exceeds the effective tax rate on outward supplies (inverted duty structure), provided the outward supplies are taxable (not exempt) and statutory conditions and procedural requirements are met. Refunds are computed per GST rules using the prescribed formula, require supporting invoices and filings, and can be subject to departmental scrutiny and adjustments for apportioned goods/services. Legal precedents have recognized such refunds, but entitlement depends on factual classification of supplies and strict compliance with refund procedures.