GST questions on Refund

Great question, Yashsr!

Regarding GST refund under inverted duty structure for services like job sizing and weaving in the textile industry, here’s the current understanding:

1. Is refund under inverted duty structure available for these services?

• Refund under inverted duty structure applies when the rate of tax on inputs (goods or services) is higher than the rate of tax on output supply.

• For textile-related services such as job sizing and weaving, which are treated as services, the eligibility depends on the GST rates on inputs consumed vs. the GST rate on output service.

• Usually, job work services and allied textile services have GST rates ranging from 5% to 18%, but the rates on inputs used can sometimes be higher.

2. Circulars/Notifications Reference

• Earlier, Circular No. 97/16/2018-GST dated 23rd April 2018 clarified aspects related to refunds under inverted duty structure for services.

• For textiles specifically, the Government has allowed refund of accumulated ITC for job work and weavingunder certain conditions.

• However, it is essential to verify the latest notifications because the scope of refund under inverted duty structure was curtailed in some categories post 2018.

3. Current Position

• Refund for inverted duty structure on job work services related to textiles is generally available if all conditions are met.

• Conditions include:

  • No output supply is exempt.

  • Proper documentation and ITC utilization.

  • Claim filed within the stipulated time.

Suggestion:

• Check the latest CBIC circulars and GST refund notifications for any recent changes.

• Cross-verify with Notification No. 10/2017-CT(R) and subsequent amendments.

• Consult a GST expert or use the GST portal’s refund module to assess eligibility case-wise.