Reund of Unutilised Input TAX Credit
Subject to the provisions of section 54(10), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period – section 54(3) of CGST Act. [section 54(10) provides for recovery of penalty, tax or interest from any refund due].
No refund of unutilized input tax credit shall be allowed in cases other than exports including zero rated supplies or in case where the credit has accumulated on account of rate of tax on inputs being higher than rate of tax on output supplies, other than nil rated or fully exempted supplies – first proviso to section 54(3) of CGST Act.
No refund of unutilized input tax credit shall be allowed in case where the goods exported out of India are subjected to export duty – second proviso to section 54(3) of CGST Act.
No refund of input tax credit shall be allowed if the supplier of goods or services avails duty drawback of CGST/SGST/UTGST or claims refund of IGST paid on such supplies – third proviso to section 54(3) of CGST Act. However, drawback of customs duty portion can be availed.
Drawback – “Drawback” in relation to any goods manufactured in India and exported, means the rebate of duty, tax or cess chargeable on imported inputs or any domestic inputs or input services used in the manufacture of such goods – section 2(42) of CGST Act.
Refund only in case of (a) exports and supplies to SEZ (b) inverted rate structure – Refund will be admissible only in case of physical exports and supplied to SEZ. Provision of ‘deemed export’ has been made in CGST Act. However, there is no specific provision of refund in case of deemed exports or supplies to EOU.
Refund is admissible if GST rate on inputs is higher that GST rate of output supplied. However, refund is not available in case were supply is exempted or nil rated – first proviso to section 54(3) of CGST Act.