TaxTMI 
TaxTMI 
Refund of unutilized ITC on account of accumulation due to inverted tax structure [Section 54(3) read with Rule 89 ]
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....ted or fully exempt supplies). [ Read with Clarification on refund related issues Circular No. 197/09/2023- GST dated 17th July 2023 ] * No refund of unutilized input tax credit shall be allowed * in case where the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies, and * in cases where the goods exported out of India are subjected to export duty. [ Omitted vide Finance (No. 2) Act, 2024 ] [ w.e.f. 01.11.20224 vide N.No. 17/2024 dated 27.09.2024 ] * As per Notification No. 15/2017-Central Tax (Rate) dated 28.06.2017 [ w.e.f 01.07.2017 ] * ​​​​​From 20.10.2023&nbs....
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.... the electronic credit ledger shall be debited by the applicant in an amount equal to the refund so claimed. * Fully electronic refund process through FORM GST RFD-01, for refund of ITC on account of inverted duty structure in the the Master Circular No. 125/44/2019-GST Dated 18.11.2019. * Declaration/Statement/Undertaking/Certificates to be filled online and Supporting documents to be additionally uploaded are specified in the Master Circular No. 125/44/2019-GST Dated 18.11.2019. Computation of Refund in case of Inverted Duty Structure [ Rule 89(5) ] (a) In the case of refund on account of inverted duty structure, refund shall be granted as per the following formula: Maximum Refund Amount = {(Tur....
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....ther, Refund shall be allowed on turnover of goods as well as services. Before amendment by Notification 21/2018, the formula provided for refund in respect of turnover of inverted duty rated goods only. Notification No. 26/2018 dated 13-06-2018, further reiterated the above amendments in formula for inverted duty rated refunds and also made it applicable retrospectively w.e.f. 01-07-2017. * Guidelines for refunds of unutilized Input Tax Credit [ Para 36 to 40 of Master Circular No. 125/44/2019-GST Dated 18.11.2019 ] * Para 36 - Applicants of refunds of unutilized ITC, i.e. refunds pertaining to items listed at (a), (c) and (e) in para 3 of the Circular No. 125/44/2019-GST, shall have to upload a copy of FORM GS....
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.... are available in FORM GSTR-2A of the relevant period uploaded by the applicant. * Para 37 - In case of refunds pertaining to items listed at (a), (c) and (e) in para 3 Circular No. 125/44/2019-GST, the common portal calculates the refundable amount as the least of the following amounts: * a) The maximum refund amount as per the formula in rule 89(4) or rule 89(5) of the CGST Rules [formula is applied on the consolidated amount of ITC, i.e. Central tax + State tax/Union Territory tax +Integrated tax]; * b) The balance in the electronic credit ledger of the applicant at the end of the tax period for which the refund claim is being filed after the return in FORM GSTR-3B f....
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....ble amount of compensation cess shall be done separately and the amount so calculated will be entirely debited from the balance of compensation cess available in the electronic credit ledger. * Para 40 - The third proviso to section 54(3) of the CGST Act states that no refund of input tax credit shall be allowed in cases where the supplier of goods or services or both avails of drawback in respect of Central tax. It is clarified that if a supplier avails of drawback in respect of duties rebated under the Customs and Central Excise Duties Drawback Rules, 2017, he shall be eligible for refund of unutilized input tax credit of Central tax/ State tax/ Union Territory tax / Integrated tax/ Compensation cess. It ....
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....it is accumulated on account of rate of tax of inputs being higher than the rate of tax on output supplies i.e. on account of inverted duty structure. Rule 89(5) of CGST Rules, 2017 prescribes the formula for grant of refund in cases of inverted duty structure. Vide Notification No. 14/2022-Central Tax dated 05.07.2022, amendment has been made in the formula prescribed under rule 89(5) of CGST Rules, 2017. Further, vide Notification No. 09/2022-Central Tax (Rate) dated 13.07.2022, which has been made effective from 18.07.2022, the restriction has been placed on refund of unutilised input tax credit on account of inverted duty structure in case of supply of certain goods falling under chapter....