Inverted duty refund, Goods and Services Tax - GST

[KARAN VERMA]

Sir

I am manufacturing tractors and sold at 12%, now at present I am taking three type of refunds -

1. Refund from custom- Tractors export with 12% IGST payment

2. Refund from GST - Tractors export without GST

3. Inverted duty refund - Because inputs for tractors falls under 28% and 18% and output attract 12 %. Therefore, in case of domestic sale, I claim inverted refund.

Now, GST department said you are not eligible for refund of any claim because you are taking refund of IGST paid on export of tractors and as per second Proviso to section 54(3), you are not eligible.

Section 54(3) -Provided also that no refund of input tax credit shall be allowed, if the supplier of goods or services or both avails of drawback in respect of central tax or claims refund of the integrated tax paid on such supplies.

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Posts / Replies

[Rajagopalan Ranganathan]

Sir,

You can claim a refund due to an inverted duty structure in respect of tractors supplied within the taxable territory, that is, within India.

In respect of tractors exported without GST, your claim for refund of unutilized ITC will include the refund due to inverted duty structure.

In respect of tractors exported on payment of IGST, you can claim the IGST paid on exported tractors, and in view of the third proviso to Section 54 (3) of IGST Act, 2017 you cannot claim again refund in view of the inverted duty structure. However, I would suggest that you may take up the point with GST Council for any remedy. If you do not get any remedy the only option is to approach the jurisdictional High Court through a writ petition.