GST refunds with payment of tax and IDS for fabrics under same taxperiod

[Prabhakar Jebakumar]

Dear all, A manufacturer of fabrics is engaged in both domestic sales and exports with payment of tax. During a particular month, Export sales with payment of tax say IGST Rs. 250000/- was made and tax paid by adjusting ITC as per GSTR-3B. The IGST refunds was automatically credited by Customs dept based on Shipping Bills. The total ITC for the said period (claimed in GSTR-3B) excluding services and capital goods is nearly 60,00,000/-. Now Need to obtain refunds under IDS for domestic goods. 

For that please clarify, whether IDS refund for the same period is available or not. If it is available, what would be the net ITC. It is Rs.60,00,000/- or Rs. 35,00,000 (60lakh - 35lakh). I believe it is Rs.35 lakh as ITC of Rs. 25lakh is encashed under automatic route. Kindly clarify. Thank you all in advance

[Prabhakar Jebakumar]

Can any of our respected experts clarify please

[Padmanathan KV]

In my opinion, your calculation is correct. Section 54(3) proviso expressly bars refund of unutilized ITC where refund of IGST is claimed on such supply.

[Prabhakar Jebakumar]

Ok sir.. what is the meaning of such supplies in provision sir

[Shilpi Jain]

Refund should be allowed. Pls look at this decision VSM WEAVESS INDIA PVT. LTD - 2024 (1) TMI 924 - MADRAS HIGH COURT VSM Weavess India (P.) Ltd.

[Prabhakar Jebakumar]

Yes mam, taxpayer can get proportionate ITC on zero rated supplies and IDS route for same tax period. but if he done exports with payment of tax and zero rated supplies in same tax period . As IGST tax paid on  utilising ITC is encashed as refund through automatic route, how it is possible to use the ITC utilised to pay the IGST on exports to include in Net ITC calculation  of Zero rated exports* Does it not amount to double claim,, pls clarify mam

AI Summary

Whether exporter can claim IDS refund after IGST refund used ITC, and if net refundable ITC is ?35L or ?60L A fabric manufacturer making domestic and export supplies paid IGST on exports by utilizing ITC and received automatic IGST refund; total ITC claimed in the period was ?60,00,000. The question is whether an IDS refund for the same period is available and whether net refundable ITC is ?60,00,000 or ?35,00,000 (i.e., ?60L minus ?25L encashed via IGST refund). Forum responses conflict: one cites a statutory proviso barring refund of unutilized ITC where IGST refund on the same supply is claimed, implying net ITC ?35L; another cites a court decision supporting proportionate ITC/IDS refund, raising concern about potential double claims.