Refund of tax on inverted structure

Hi Sudhakar,

Your query relates to claiming refund of unutilised ITC under two different scenarios:

1. Refund of ITC accumulated due to inverted tax structure

2. Refund of unutilised ITC on account of exports without payment of tax

Key points to clarify:

1. Refund of ITC on Inverted Tax Structure

• Allowed under Section 54(3)(ii) of CGST Act.

• Formula used is correct:

  $Turnover\; of\; inverted\; tax\; structure/Total\; turnover\times Net\; ITC\; (excluding\; services/capital)-Tax\; payable\; on\; inverted\; supplies$

• Refund is granted for ITC accumulated due to inverted tax rates on inputs vs outputs.

2. Refund of unutilised ITC on Exports without Payment of Tax

• As per Section 54(3)(iii) CGST Act, ITC refund is allowed for unutilised ITC on exports of goods or services without payment of IGST.

• However, if the exporter has claimed drawback, refund of IGST/ITC is not allowed for those goods covered under drawback claims.

Regarding your case:

• Since drawback is being claimed on some shipping bills, the taxpayer cannot claim refund of unutilised ITC on exports without payment of tax for those shipping bills.

• Refund on inverted duty structure can be claimed separately and already granted by the CGST office.

Summary:

Suggestion:

• The taxpayer should not claim refund for unutilised ITC on exports where drawback has been availed.

• Separate refund claims for inverted tax structure and exports without payment of tax can be filed only if exports are not subject to drawback.