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Refund of Gst paid on Reverse charge mechanisum

Ashish Agrawal (5 Points)

24 December 2018  
we paid Gst on purchase of scrap from railway department under RCM as per sec 9 (3)
our output tax rate is less than input tax. can we claim refund of gst paid on above RCM.

 6 Replies

Ravi Kumar Somani (Indirect Taxes Specialization)   (3893 Points)
Replied 24 December 2018

Yes, This is known as inverted rate structuring and refund would be eligible as per section 54 and rule 89(5) of GST rules.

Ravi Kumar Somani
ravikumar @ hiregange.com

pritesh (CA Final student) (7071 Points)
Replied 25 December 2018

yes. .it is covered under inverted duty structure concept.

Ashish Agrawal (5 Points)
Replied 25 December 2018

but some expert says that gst paid on scrap purchase from railway department (govt) not elegible.
pls clear this poitn with notification or cercular or rulr.

ACA Sarita Laddha (Practicing CA) (1225 Points)
Replied 25 December 2018

The specified case is not covered under  the relevant provision of GST. However as per Sec 54(3) of the CGST Act, 2017, a registered person may claim a refund of unutilized input tax credit on account of Inverted Duty Structure (Rate of tax on Inputs > Rate of tax on Outputs & Output services). 

Tax paid under RCM is nothing but Input which we pay directly to the govt and not to the supplier and the same is available for ITC like normal input. 

Onle in case of supply of Construction Services, refund of unutilized input tax credit is not allowed under sub-section (3) of section 54 of the said Central Goods and Services Tax Act.

Hence, in my opinion, the mentioned case is falling under inverted duty structure and refund is available.

Thanks and Regards.

2 Like

saurabh sawlani (2011 Points)
Replied 25 December 2018

great explanation mam!!🙏🙏

Ashish Agrawal (5 Points)
Replied 25 December 2018

thanks a lot madam.

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