REFUND OF ITC OF CESS COMPONENT

[NAMAN DOKANIA]

Mr X, deals in Trading of coal whereby Cess was on quantity traded. He has purchased coal but the supplier did not file the return on time due to which the same did not appeared in the GSTR-2B and Mr X had to pay Cess on that purchase in cash. Now in next month 2B the same was appearing. How can Mr X take the refund of that Cess because in no case he can adjust that ITC.

[Sooraj B]

He can utilize the Cess amount against any future output tax liability under Cess . In case, there is no output tax liability under Cess, the ITC will lapse . There is no provision for refund of accumulated ITC except on account of inverted duty structure ( GST rate on inputs is higher than that output ) and on account of export of goods/services without payment of IGST based on LUT .

[Ryan Vaz]

? Refund of Compensation Cess paid in cash is NOT admissible merely because the corresponding ITC appeared later in GSTR-2B.

? Once the invoice reflects in GSTR-2B, ITC of Compensation Cess can be availed, but its utilisation is restricted only against output Compensation Cess liability.

? If Mr X has future Cess liability, the credit can be carried forward and utilised—refund is not allowed.

[Sadanand Bulbule]

Mr. X cannot claim refund of such Cess, as excess tax paid due to non-reflection in GSTR-2B is neither refundable nor adjustable under the CGST Act, and the only remedy is availing ITC when eligible, not cash refund.

[KASTURI SETHI]

Refund not admissible.

Tax-paid character is at par whether paid in cash or through Electronic Credit Account.

There are also case laws to this effect pertaining to pre-GST era. 

On the other hand, the buyer cannot be punished for the offence committed by the supplier. 

[KASTURI SETHI]

Dear Querist,

In case a huge amount is involved, you can take shelter of Article 226 of the Constitution and file writ petition with jurisdictional High Court. Only High Court and Supreme Court can go beyond laws in the interest of fair social justice.

The purpose of framing any law is to provide fair social justice. If the law is a hurdle, that law needs to be amended.

AI Summary

Compensation Cess paid in cash when invoices miss GSTR-2B: later ITC allowed, but no refund for timing mismatch Input tax credit of Compensation Cess that was paid in cash due to non-reflection of the supplier's invoice in GSTR-2B is not stated to be refundable merely because the invoice subsequently appears. Once reflected in GSTR-2B, the corresponding Compensation Cess ITC may be availed, but its utilisation is confined to discharge of output Compensation Cess liability; if no such liability arises, the credit is carried forward and may effectively lapse, as refund of accumulated ITC is stated to be admissible only in prescribed cases such as exports without payment of tax and inverted duty structure, not for GSTR-2B timing mismatches. A writ petition under Article 226 is suggested as an exceptional remedy where significant amounts are involved.