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

GST refunds for fabrics: can IDS refund be claimed when IGST paid with ITC was already encashed, risking double recovery?
Whether a fabric manufacturer who utilised ITC to pay IGST on exports that was subsequently encashed can claim IDS refund in the same period; total ITC claimed is Rs. 60,00,000 and IGST encashed Rs. 2,50,000, raising whether net ITC for IDS is Rs. 60,00,000 or reduced to exclude ITC already encashed. The issue turns on preventing double recovery and the interaction between statutory bars on refund of utilised ITC and allocation rules permitting proportionate ITC for zero-rated supplies.