NISARG JOSHI (Accountant) (40 Points)
09 December 2020
JATINDER KUMAR
(Accountant)
(3662 Points)
Replied 09 December 2020
CA Akshay Hiregange
(Partner - Audit & Assistance)
(4515 Points)
Replied 09 December 2020
The refund formula for inverted duty structure does not include capital goods & input services.
Although considering the intention of the GST law and the rationale behind inverted duty structure refund, such credits must be eligible on a total basis, i.e. when total ITC > total tax payment on account of rate of tax of outward supply being lower, refund must be enabled.
This ratio was upheld in favour of the assessee in Gujarat High Court in VKC Footsteps case. The refund can be litigated, although it is suggested to apply for the same and establish your claim to navigate time restriction on refund applications. For more please reach me at akshay @ hiregange.com
CA Akshay Hiregange
(Partner - Audit & Assistance)
(4515 Points)
Replied 09 December 2020
| Originally posted by : CA Akshay Hiregange | ||
 |
The refund formula for inverted duty structure does not include capital goods & input services. Although considering the intention of the GST law and the rationale behind inverted duty structure refund, such credits must be eligible on a total basis, i.e. when total ITC > total tax payment on account of rate of tax of outward supply being lower, refund must be enabled. This ratio was upheld in favour of the assessee in Gujarat High Court in VKC Footsteps case. The refund can be litigated, although it is suggested to apply for the same and establish your claim to navigate time restriction on refund applications. For more please reach me at akshay @ hiregange.com |
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https://indiankanoon.org/doc/27435529/
APURBA CHATTERJEE
(QUALIFIED CHARTERED ACCOUNTANT)
(602 Points)
Replied 10 December 2020
LD/69/61, [2020-TIOL-1599-MAD-GST], Transtonnelstroy Afcons Joint Venture and Ors vs. Union of India and Ors, 21/09/2020
Section 54(3)(ii) of the CGST Act is held to be constitutionally valid. Rule 89 (5) of the CGST Rules, limiting the ITC only in respect of Inputs and not in respect of input services is held to be intra-vires Section 54(3)(ii) of the CGST Act.
So only refund of only inputs available in case of inverted duty structure.
CA Akshay Hiregange
(Partner - Audit & Assistance)
(4515 Points)
Replied 10 December 2020
Well then now we have contradictory HC rulings. Although this ruling considers VKC footsteps contentions, and even still dismisses them. Maybe resolved at SC next. Although, it is important to mention, the rulings speak only of input services and inputs and not capital goods.
NISARG JOSHI
(Accountant)
(40 Points)
Replied 11 December 2020
debora M
(BUSINESS DEVELOPMENT MANAGER)
(1697 Points)
Replied 11 December 2020
But you cannot claim an input tax credit if you claim depreciation on the GST paid while purchasing the capital asset. Inputs are consumed while the final products are made and are treated as business expenses. But the capital goods(machinery) are not consumed when the final product is made.
CA Akshay Hiregange
(Partner - Audit & Assistance)
(4515 Points)
Replied 11 December 2020
Nisarg you may make the refund application and stake your claim, as this issue is expected to be resolved only at ther Supreme Court. Option to reverse under protest maybe explored, etc. Suggest you to take the services of a professional if values are high. May write to me at akshay @ hiregange.com.
John
(rejoji3693)
(26 Points)
Replied 12 December 2020
You can only setoff Input against Output liability
Read more at: https://www.caclubindia.com/forum/can-i-claim-refund-of-capital-goods-itc--565707.asp
GSTR 9 and 9C for FY 23-24 as amended by Notification 12/2024 dated 10th July 2024(with recording)
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