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TMI BlogDenied Inverted Duty Structure (IDS) RefundX X X X Extracts X X X X X X X X Extracts X X X X ..... Denied Inverted Duty Structure (IDS) Refund X X X X Extracts X X X X X X X X Extracts X X X X ..... #119808;𝐜𝐭 To claim an ITC refund under IDS, these conditions must be met: ✅ Input tax rate must be 𝐡𝐢𝐠𝐡𝐞𝐫 than output supply ✅ ITC must be 𝐚𝐜𝐜𝐮𝐦𝐮𝐥𝐚𝐭𝐞𝐝 𝐝𝐮𝐞 𝐭𝐨 𝐭𝐡𝐢⻑ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2; 𝐫𝐚𝐭𝐞 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 ✅ Output should 𝐧𝐨𝐭 𝐛𝐞 𝐧𝐢𝐥-𝐫𝐚𝐭𝐞𝐝 or fully exempt ✅ Output should 𝐧𝐨𝐭 𝐛𝐞 𝐧𝐨𝐭𝐢 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19839;𝐢𝐞𝐝 as ineligible ✅ Claim must be filed 𝐰𝐢𝐭𝐡𝐢𝐧 𝟐 𝐲𝐞𝐚𝐫𝐬 from end of relevant FY 𝐖𝐡𝐚𝐭 𝐝𝐨𝐞𝐬 𝐭𝐡𝐞 𝐂𝐁𝐈𝐂 𝐬𝐚𝐲? 📄 Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 125/44/2019 & AP Circular 3/2020 ✅ Refund can't be denied just because input tax rate = or < output ✅ Rule 89(5) includes 𝐚𝐥𝐥 𝐢𝐧𝐩𝐮𝐭 𝐈𝐓𝐂 📄 Circular 135/05/2020 ❌ Refund not allowed if accumulation is 𝐫𝐚𝐭𝐞 𝐜𝐡𝐚𝐧𝐠 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;𝐞𝐬 𝐨𝐯𝐞𝐫 𝐭𝐢𝐦𝐞 (trading businesses, for example) 𝐖𝐡𝐚𝐭 𝐝𝐨 𝐭𝐡𝐞 𝐜𝐨𝐮𝐫𝐭𝐬 𝐬𝐚𝐲? 🧑⚖️ Delhi HC - Indian Oil Corporation and Kerala HC - Malabar Fuel Corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ✅ Same rate on inputs & output can't lead to refund denial 🧑⚖️ Calcutta HC - Shivaco Associates ✅ Refund allowed even if main input = output, if other inputs are taxed higher Another 𝐭𝐫𝐢𝐜𝐤𝐲 🐘 issue 👉 The key condition to claim the IDS refund is that ITC must be accumulated due to the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference But accumulation can also happen due to: * High inventory * Loss-making business * Pricing/marketing strategy And till now, 𝐧𝐨 𝐜𝐢𝐫𝐜𝐮𝐥𝐚𝐫 𝐜𝐥𝐞𝐚𝐫𝐥𝐲 𝐞𝐱𝐩𝐥𝐚𝐢𝐧𝐬 𝐡𝐨𝐰 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19853;𝐨 𝐞𝐬𝐭𝐚𝐛𝐥𝐢𝐬𝐡 that ITC must have been accumulated due to the rate difference 𝐑𝐮𝐥𝐞 𝟖𝟗(𝟓) gives the formula to compute the refund, ➡️ but it should apply 𝐨𝐧𝐥𝐲 𝐚𝐟𝐭𝐞𝐫 𝐜 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 𝐨𝐧𝐟𝐢𝐫𝐦𝐢𝐧𝐠 that accumulation happened due to IDS (i.e., higher GST rate on some or all inputs vs outputs) 𝐒𝐨, 𝐰𝐡𝐚𝐭 𝐬𝐡𝐨𝐮𝐥𝐝 𝐲𝐨𝐮 𝐝𝐨? 👉 Don't rely only on rate comparison 👉 Focu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on actual ITC accumulation due to structure
👉 Apply Rule 89(5) only after checking rate-based accumulation
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