Refund in Case of Inverte Duty Structure :
In case of inverted duty rates (i.e. input tax credit more than tax payable on outward supply)there is provision of refund of excess credit under section 54(3) of CGST and SGST Act.
No refund if tax is Nil or exempted – The refund is not admissible where the rate of output supply is Nil or exempted. Thus, some tax must be payable. No refund in certain cases, even if ITC more than tax paid –As per proviso
(ii) to section 54(3) of CGST and SGST Act, Government can notify supply of goods and services where refund of unutilized Input Tax Credit (ITC) will not be admissible, even if ITC is more that tax payable on output supply. Under these powers, Notification No.5/2017-CT (Rate) and 5/2017-IT (Rate) both dated 28-6- 2017 has been issued. As per this notification, the refund is not admissible even if ITC is more that tax paid, in the following cases –
* Woven textile fabrics falling under specified headings in chapters 50 to 55
* Knotted netting of twine, cordage of rope, made up of fishing nets or other made up nets, of textile fabrics, falling under heading = 5608 [inserted w.e.f. 14-11-2017]
*Corduroy fabrics falling under head 5801 [inserted w.e.f. 22-9-2017]
* Narrow woven fabrics (all goods) falling under chapter 60
* Railway locomotives and their parts falling under heading 8601 to 8608
Restriction not applicable in case of export of aforesaid goods – This restriction is only in respect of refunds under section 54(3)(ii) of CGST Act. Thus, the restriction is not applicable to refund under section 54(3)(i) of CGST Act i.e. zero rated supplies. Hence, in case of export of these goods, refund of entire ITC will be available – MF(DR) circular No. 18/18/2017-GST, dated 16-11-2017. [The clarification is in respect of fabrics, but principle applies to all goods notified under Notification No. 5/2017-CT (Rate), dated 28-6-2017].
No refund of ITC even if input tax credit more than GST payable on outward supply in case of construction of complex – In case of services of construction of complex [specified in Item5(b) of Schedule II of CGST Act], refund of unutilized ITC will not be available – Notification No. 15/2017-CT (Rate) and 12/2017-IT (Rate) both dated 28-6-2017.