Amendment in Inverted Duty Credit will be only prospective and not
Retrospective
·
Refund
Clarification following Restrictions in Ch. 15 and 27
·
Refund of unutilized input tax
credit in cases where credit is accumulated on account of rate of tax of inputs
being higher than the rate of tax on output supplies i.e.
on account of inverted duty structure
·
Formula prescribed under
sub-rule (5) of rule 89 of the CGST Rules, 2017
·
Amended formula under
sub-rule (5) of rule 89 of the CGST Rules, 2017 for calculation of refund of
input tax credit on account of inverted duty structure would be applicable in
respect of refund applications filed on or after 05.07.2022. The refund
applications filed before 05.07.2022 will be dealt as per the formula as it
existed before the amendment made vide Notification No. 14/2022-Central Tax
dated 05.07.2022.
·
Restriction has been placed
on refund of unutilised input tax credit on account
of inverted duty structure in case of supply of certain goods falling under
chapter 15 and 27 w.e.f. 18.07.2022.
·
it is clarified that the
restriction imposed by the said notification would be applicable in respect of
all refund applications filed on or after 18.07.2022, and would not apply to
the refund applications filed before 18.07.2022.
[Circular No. 181/13/2022-GST dated 10 November
2022]
Subject: Clarification on
refund related issues.
Attention
is invited to sub-section (3) of section 54 of CGST Act, 2017, which provides
for the refund of unutilized input tax credit in cases where credit is
accumulated on account of rate of tax of inputs being higher than the rate of
tax on output supplies i.e. on account of inverted
duty structure. Sub-rule (5) of rule 89 of CGST Rules, 2017 prescribes the
formula for grant of refund in cases of inverted duty structure. Vide
Notification No. 14/2022-Central Tax dated 05.07.2022, amendment has been made
in the formula prescribed under sub-rule (5) of rule 89 of the CGST Rules,
2017. Further, vide Notification No. 09/2022-Central Tax (Rate) dated
13.07.2022, which has been made effective from 18.07.2022, the restriction has
been placed on refund of unutilised input tax credit
on account of inverted duty structure in case of supply of certain goods
falling under chapter 15 and 27.
2.
Representations have been received from the trade and the field formations
seeking clarification on various issues pertaining to the implementation of the
above notifications. In order to clarify the issues and to ensure uniformity in
the implementation of the provisions of law across the field formations, the
Board, in exercise of its powers conferred by section 168 (1) of the Central
Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby
clarifies the issues as under:
|
S.No. |
Issue |
Clarification |
|
1. |
Whether the formula
prescribed under sub-rule (5) of rule 89 of the CGST Rules, 2017 for
calculation of refund of unutilised input tax credit
on account of inverted duty structure, as amended vide Notification No.
14/2022-Central Tax dated 05.07.2022, will apply only to the refund
applications filed on or after 05.07.2022, or whether the same will also
apply in respect of the refund applications filed before 05.07.2022 and
pending with the proper officer as on 05.07.2022? |
Vide Notification No.
14/2022-Central Tax dated 05.07.2022, amendment has been made in sub-rule (5)
of rule 89 of CGST Rules, 2017, modifying the formula prescribed therein. The
said amendment is not clarificatory in nature and is applicable prospectively
with effect from 05.07.2022. Accordingly, it is clarified that the said
amended formula under sub-rule (5) of rule 89 of the CGST Rules, 2017 for
calculation of refund of input tax credit on account of inverted duty
structure would be applicable in respect of refund applications filed on or
after 05.07.2022. The refund applications filed before 05.07.2022 will be
dealt as per the formula as it existed before the amendment made vide
Notification No. 14/2022-Central Tax dated 05.07.2022. |
|
2. |
Whether the restriction
placed on refund of unutilised input tax credit on
account of inverted duty structure in case of certain goods falling under
chapter 15 and 27 vide Notification No. 09/2022-Central Tax (Rate) dated
13.07.2022, which has been made effective from 18.07.2022, would apply to the
refund applications pending as on 18.07.2022 also or whether the same will
apply only to the refund applications filed on or after 18.07.2022 or whether
the same will be applicable only to refunds pertaining to prospective tax
periods? |
Vide Notification No.
09/2022-Central Tax (Rate) dated 13.07.2022, under the powers conferred by
clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST
Act, 2017, certain goods falling under chapter 15 and 27 have been specified
in respect of which no refund of unutilised input
tax credit shall be allowed, where the credit has accumulated on account of
rate of tax on inputs being higher than the rate of tax on the output
supplies of such specified goods (other than nil rated or fully exempt
supplies). The said notification has come into force with effect from
18.07.2022. The restriction imposed vide Notification No. 09/2022-Central Tax
(Rate) dated 13.07.2022 on refund of unutilised
input tax credit on account of inverted duty structure in case of specified
goods falling under chapter 15 and 27 would apply prospectively only.
Accordingly, it is clarified that the restriction imposed by the said notification
would be applicable in respect of all refund applications filed on or after
18.07.2022, and would not apply to the refund applications filed before
18.07.2022. |
3. It is requested that suitable trade notices may be issued to
publicize the contents of this Circular.
4. Difficulty, if any, in
implementation of this Circular may please be brought to the notice of the
Board.
F. No. CBIC-20021/4/2022