GST REFUND ON INADVERTENT TAX STRUCTURE

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This query is : Resolved

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This discussion addresses a job worker who supplied raw materials and added consumables/chemicals, but charged a lower GST rate (5%) than applicable to the added materials (18%/28%). This has led to accumulated Input Tax Credit (ITC). The query seeks clarification on whether the job worker is eligible for a GST refund under the 'inadvertent tax structure' or other refund categories, especially considering the mixed tax rates and the nature of the supply.

S. RAVICHANDRAN

S. RAVICHANDRAN (Querist)

26 June 2020 IF JOB WORK DONE FOR OTHERS, THE RAW MATERIAL SUPPLIED BY THE PRINCIPAL, FURTHER OTHER CONSUMABLES AND CHEMICALS ADDED BY THE JOB WORKER FOR FINAL FINISHED PRODUCT. THE CONSUMABLES AND CHEMICALS RATE OF TAX IS 18% AND 28%. BUT THE JOB WORKER CHARGED GST 5% UNDER HSN 9988. IN THESE CIRCUMSTANCES, THE ITC HAS BEEN ACCUMULATED. PLEASE CLARIFY THE JOB WORKER ELIGIBLE FOR CLAIM REFUND ON INADVERTENT TAX STRUCTURE OR ANY OTHER HEAD IN THE GST REFUND.
S. RAVICHANDRAN

Lekhraj sood

Lekhraj sood (Expert)

27 June 2020 You may have to review the correctness of charging 5% gst in your case because you are adding some materials also.If you are treating it a composite supply and job work being principal supply then you should review the agreement properly because it carries a risk of litigation, in my view.
If that is all correct then you can definitely claim refund under Inverted tax structure.

Lekhraj sood

Lekhraj sood (Expert)