TaxTMI 
TaxTMI 
Clarification regarding removal of restriction of refund of accumulated ITC on fabrics - reg.
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Revenue, Tax Research Unit vide Circular No. 56/30/2018-GST dated 24th August, 2018 has issued clarifications regarding the applicability and intent of the Notification No. 20/2018-Central Tax (Rate) dated 26.07.2018 (which seeks to amend Notification No. 5/2017-Central Tax (Rate) dated 28.06.2017) regarding removal of restriction of refund of accumulated ITC on fabrics, which is annexed herewith. The corresponding State Notifications are 20/2018-State Tax (Rate) dated 28.07.2018 and 5/2017-State Tax (Rate) dated 29.06.2017 to the Notification No. 20/2018-Central Tax (Rate) dated 26.07.2018 and Notification No. 5/2017-Central Tax (Rate) dated 28.06.2017 respectively. In exercise of powers conferred by section 168 of the Tripura State Go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....notifies the items on which refund of accumulated input tax credit on account of inverted duty structure is not allowed. Some of the items notified under this notification are fabrics. A total 10 categories of fabrics covered in the notification are as follows: S. No. Tariff item, heading, sub-heading or Chapter Description of Goods (1) (2) (3) 1. 5007 Woven fabrics of silk or of silk waste 2. 5111 to 5113 Woven fabrics of wool or of animal hair 3. 5208 to 5212 Woven fabrics of cotton 4. 5309 to 5311 Woven fabrics of other vegetable textile fibres, paper yarn 5. 5407, 5408 Woven fabrics of manmade textile materials 6. 5512 to 5516 Woven fabrics of manmade staple f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... August, 2018, in respect of goods mentioned at serial numbers 1, 2, 3, 4, 5, 6, 6A, 6B, 6C and 7 of the Table below; and (ii) in respect of said goods, the accumulated input tax credit lying unutilised in balance, after payment of tax for and upto the month of July, 2018, on the inward supplies received up to the 31st day of July 2018, shall lapse. 5. The doubts raised, with reference to changes made vide notification No. 20/2018-Central Tax (Rate) are as follows: (1) Whether this notification seeks to lapse all the input tax credit lying unutilised after payment of tax upto the month of July. 2018? (2) Whether unutilised ITC in respect of services and capital goods shall also be disallowed? (3) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(ii) in the said proviso is that it provides for lapsing of input tax credit that would have been refundable in terms of section 54 of the Act, for the period prior to the 31^st July, 2018, but for the restriction imposed vide said notification No. 5/2017-Central Tax (Rate) and that too to the extent of accumulated ITC lying unutilised after making payment of GST upto the month of July, 2018. In other words, in terms of amended notification, the input tax credit on account of inverted duty structure lying in balance after payment of GST for the month of July (on purchases made on or before the 31^st July, 2018) shall lapse. 8 As the notification No. 5/2017-Central Tax (Rate) does not put any restriction in respect of ITC on input s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efund was blocked subsequently by inserting entries in notification No. 5/2017-Central Tax (Rate)]. Tax payable thereon is Rs. 25 lakh (@ 5%). Assuming the net ITC availed on inputs, during this period, was Rs. 30 lakh. Applying the formula prescribed in rule 89 (5), the accumulated ITC on account of inverted duty structure comes to Rs. 5 lakh. In other words, this manufacturer has accumulated Rs. 5 lakh on inputs on account of inverted duty structure during the said period. If ITC balance lying unutilized with him is more than this amount, say Rs. 10 lakh, the ITC equal to Rs. 5 lakh will only lapse. However, if for any reason, the ITC balance lying unutilized is less than Rs. 5 lakh, say Rs. 3 lakh, the ITC equal to Rs. 3 lakh will lapse.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l also lapse and concern has been expressed that this would amount to double taxation. It is clarified that the proposed amendment seeks to lapse only such credit that has been accumulated on inputs on account of inverted duty structure. Therefore, in case a manufacturer, whose accumulated ITC is liable to lapse in terms of said notification, has certain stock lying in balance as on 31.7.2018, the input tax credit involved in inputs contained in such stock ( including inputs lying as such) may be excluded for determination of Net ITC for the purposes of applying the said formula. For this purpose, the ITC relating to inputs contained in stock may be determined in the manner as provided in S. No. 7 of Form GST ITC-01. 12. As regards....