Clarifications on refund of unutilized input tax credit of GST paid on inputs in respect of exporters of fabric. - GST - States - 018/18/2017-GST

Circular No. 18/18/2017-GST No. 12-25/2018-19-EXN-GST-(575)-6165-6182 Government of Himachal Pradesh, Excise and Taxation Department To 1. The Additional/Jt. Commissioner of State Taxes and Excise, (South Zone, North Zone, Central Zone), Shimla, Palampur, Mandi, H.P. 2. The Joint Commissioner of State Taxes and Excise, Flying Squad, (Central Zone, North Zone, South Zone), Una, Palampur, Parwanoo, H.P. 3. The Dy. Commissioner of State Taxes and Excise, Shimla, Solan, BBN Baddi, Sirmour, Bilaspur, Hamirpur, Mandi. Kullu, Chamba, Kangra, Revenue Distt Nurpur and Una, H.P 4. The Asstt. Commissioner of State Taxes and Excise, Incharge Distt. Kinnour, H.P Dated Shimla-9 13th March, 2019. Madam/Sir, Subject: Clarifications on refund of unutilized input tax credit of GST paid on inputs in respect of exporters of fabric. Doubts have been raised regarding the restrictions of refund of unutilized input tax credit of GST paid on inputs to manufacturer exporters of fabric [falling under chapter 50 to 55 and 60 and headings 5608,5801,5806] under GST. 2.1 The matter has been examined. In this context, subsection 3 of section 54 of the HPGST Act, 2017 provides as under: (3) Subject to the provisions of the sub-section (10), a registered person may claim refund of any unutilized input tax credit at the end of any tax period: Provided that no refund of unutilized input tax credit shall be allowed in cases other than (i) Zero rated supplies made without payment of tax; (ii) 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 or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council. 2.2 Based on the recommendations of the GST Council, Notification No. 5/2017-State Tax (Rate) dated 30.06.2017 [as amended from time to time] has been issued under clause (ii) of the proviso to sub-section (3) of section 54 of HPGST Act, 2017, restricting refund of unutilized input tax credit of GST paid on inputs in respect of certain specified goods, including input tax credit of GST paid on inputs. 2.3 However, the aforesaid notification having been issued under clause (ii) of the proviso to sub-section (3) of section 54 of HPGST Act, 2017, restriction on refund of unutilized input tax credit of GST paid on inputs will be applicable to zero rated supplies, that is (a) exports of goods or services or both; or (b) supply of goods or services or both to a Specified Economic Zone developer or a Special Economic Zone Unit. 2.4 Accordingly, as regards export of fabrics it is clarified that, subject to the provisions of sub-section (10) of the section 54 of HPGST Act, 2017, a manufacturer of such fabrics will be eligible for refund of unutilized input tax credit of GST paid on inputs [other than the input tax credit of GST paid on capital goods] in respect of fabrics manufactured and exported by him. 3. This Circular shall come into force w.e.f. 16.11.2017. 4. Difficulty, if any, in the implementation of this circular should be brought to the notice of this office immediately. (Rajeev Sharma, IAS) Commissioner of State Taxes and Excise, Himachal Pradesh