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Gst refund- inverted duty structure

19 December 2018

I am a manufacturer of Machines for cleaning, sorting or grading, seed, grain or dried leguminous vegetables; machinery used in milling industry or for the working of cereals or dried leguminous vegetables other than farm type machinery and parts thereof, having HSN Code 8437 and GST rate is 5% and i purchale metal with 18% GST. so I fall under Inverted duty structure.

Can I claim refund of diffrential gst amount for Inverted duty Structure?

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5 Replies

pritesh (CA Final student) (7101 Points)
Replied 19 December 2018

Section 38 refund of tax

Subject to the provisions of sub-section (8), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period:

Provided that no refund of unutilized input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs:

Provided further that no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.
Section 38 refund of tax

Subject to the provisions of sub-section (8), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period:

Provided that no refund of unutilized input tax credit shall be allowed in cases other than exports or in cases where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on outputs:

Provided further that no refund of unutilized input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.
Maximum Refund Amount = {(Turnover of inverted rated supply of goods) x Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of goods

Explanation.- For the purposes of this sub rule, the expressions “Net ITC” and “Adjusted Total turnover” shall have the same meanings as assigned to them in the GST rules.

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Pankaj Rawat (GST Practitioner) (55047 Points)
Replied 19 December 2018

As per Sub Rule (5) Rule 89
Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services)
x Net ITC ÷ Adjusted Total Turnover} - tax payable on such inverted rated supply of
goods and services.

* Services also included.

As per Section 54 (3)CGST
Where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on ouput

File Rfd 01 on portal

ARCHIT CHONGDAR (n.a) (63 Points)
Replied 26 December 2018

Is there any notifiication which notifies the sector which falls under Inverted duty structure eligable to claim refund??

like I know Garment Industry falls under Inverted Dutry structure and they are eligable to claim refund..

my question is whether my Industry is eligable to claim refund??

Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 26 December 2018

Inverted tax structure commodities are eligible normally for all products where credit accumulates due to ITC being higher than the output tax. Only some barred. P&M is not barred- refund eligible.

Nandini H Gupta (Chartered Accountant ) (369 Points)
Replied 26 December 2018

Before filing refund application online ensure all the suppliers from whom the goods are procured have filed proper gstr 1 and the same is reflected in your gstr 2a