Claim for Refund on ITC on plant and machinery - pharmaceuticals Formulation - inverted Tax Structur

Inverted duty refund in not allowed on services and capital goods hence refund of itc on plant and machinery is not allowed

No—ITC on capital goods such as plant and machinery is not refundable merely because the unit has an inverted duty structure. Under Section 54(3) of the CGST Act, the inverted-duty refund is for eligible unutilised ITC on inputs used to make the outward supply; “inputs” exclude capital goods. The fact that the unit is newly operational does not change this restriction. Also, an inverted rate on inputs alone is not enough: the rate on the relevant inputs must exceed the rate on the outward supply, subject to the statutory exclusions and applicable rules.

If the plant and machinery qualifies as capital goods and the ITC is otherwise admissible, it may generally remain in the electronic credit ledger for use against future output-tax liability. Verify the classification and rate applicable to the specific period and supplies—particularly where rates changed—before calculating any refund of input-credit accumulation.

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