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Question ID : 44416


Whether GST refund on account of Services input @18% can be claimed now where output of goods is 5% under Inverted duty structure. This is applicable in case of Suppliers selling on Eportal like Amajon,Flipcart

Posted by Mahesh Kumar on Jan 28, 2023

Filed Under GST

Answer ID : 83900

According to section 54(3) of CGST Act,2017, refund of un-utilised ITC is allowed, where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated / fully exempt). As per the rule 89(5) of CGST Rules, The formula of claiming refund in case of Inverted duty structure is as follows:- Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC ÷ Adjusted Total Turnover} - [{tax payable on such inverted rated supply of goods and services x (Net ITC÷ ITC availed on inputs and input services)}] where, Net ITC shall mean input tax credit availed on inputs during the relevant period..... In view of the above, refund is allowed on inputs and not input services. Also refer judgment of Supreme Court in case of Union of India v/s VKC Footsteps India Pvt Ltd. [2021] (SC) wherein Supreme court upholds the validity of section 54(3) of CGST Act and held that refund for unutilized input tax credit cannot be claimed on account of input services. In conclusion,refund of input services is not allowed.

Posted by ABHISHEK ASHOK RASANE on Jan 31, 2023