Regarding GST Refund of Inverted Duty.

[Jignesh Sitapara]

Dear Experter,

I wish to apply for refund of 'INVERTED DUTY STRUCTURE'. Now the Export turnover consider in Adjusted Total Turnover.

Please help me.

[Sadanand Bulbule]

In terms of formula under Rule 89(5) of the CGST Rules, export turnover is also included in the " Adjusted Total Turnover".

[Jignesh Sitapara]

Thank you so much....

[YAGAY andSUN]

Under the GST refund mechanism for Inverted Duty Structure (IDS), refund of accumulated Input Tax Credit (ITC) is governed by Section 54(3) of the CGST Act, 2017 read with Rule 89(5) of the CGST Rules, 2017. A key component in the formula for computation of admissible refund is the “Adjusted Total Turnover”.

As per Rule 89(4) and 89(5), “Adjusted Total Turnover” is defined to include the value of all outward supplies in a State or Union territory, including zero-rated supplies, but excluding inward supplies on which tax is payable by a recipient under reverse charge. Importantly, “zero-rated supply” under Section 16 of the IGST Act includes export of goods or services.

Therefore, export turnover is mandatorily included in “Adjusted Total Turnover” for the purpose of computing refund under IDS. The legal rationale is that exports, being zero-rated supplies, form part of aggregate outward supplies and cannot be excluded while determining the proportionate refund of accumulated ITC.

Consequently, while “Turnover of inverted rated supply of goods” is restricted to domestic supplies subjected to inverted tax structure, “Adjusted Total Turnover” is a broader denominator that includes exports, domestic taxable supplies, and other eligible outward supplies. This inclusion ensures uniformity in apportionment and prevents distortion in refund computation.

Thus, the inclusion of export turnover in Adjusted Total Turnover is legally mandated under Rule 89 and consistently upheld in GST refund computation methodology, ensuring proportional allocation of ITC in line with statutory framework.

AI Summary

Adjusted Total Turnover includes export turnover in inverted duty refund computation under GST refund rules. Refund of accumulated Input Tax Credit under the inverted duty structure is computed under Section 54(3) of the CGST Act read with Rule 89(5) of the CGST Rules, using Adjusted Total Turnover. Adjusted Total Turnover includes all outward supplies, including zero-rated supplies, and export of goods or services, being zero-rated supply, is mandatorily included in the refund formula for proportionate ITC apportionment.