Page 28 - GSTL_20th August 2020_Vol 39_Part 3

J60 GST LAW TIMES [ Vol. 39

REFUND ON ACCOUNT OF INVERTED
DUTY STRUCTURE
By
Rachit Kumar Agarwal
CHARTERED ACCOUNTANT

Provisions relating to refund of tax under CGST Act, 2017
Refund can be claimed for
(a) Any tax
(b) Interest if any paid on such tax
(c) Any other amount paid
Time-Limit : Refund application has to be made within a period of 2 years from the
relevant date
Refund of unutilized Input Tax Credit
As per proviso to Section 54(3) of the CGST Act, 2017, refund of unu-
tilized Input Tax Credit shall not be allowed other than
(a) Zero-rated supplies without payment of tax
(b) Inverted Duty Structure -
Meaning of term inverted duty structure
Inverted Duty Structure means rate of tax on inputs being higher than
the rate of tax on output supplies
Time-limit
Explanation 2(e) to Section 54 of CGST Act, 2017 - Two years from the
due date for furnishing of return under Section 39 for the period in which such
claim for refund arises - Vide Central Goods and Services Tax Amendment Act,
2018 w.e.f. 1-2-2019.
Prior to CGST Amendment Act, 2018 - Two years from the end of the fi-
nancial year in which such claim for refund arises.
Comments : In view of the above amendment, the time-limit for claiming the re-
fund on account of inverted duty structure has been reduced
Refund of unutilized input tax credit only on inputs
Proviso to Section 54(3) of CGST Act, 2017 - Refund is restricted to the
amount of unutilized input tax credit on the inputs.
Further Rule 89(5) of CGST Rules, 2017 - (a) Net ITC shall mean input tax
credit availed on inputs during the relevant period other than the input tax credit
availed for which refund is claimed under sub-rules (4A) or (4B) or both; and
Section 2 of the CGST Act, 2017 - Inputs means the goods which are used
or intended to be used for the purpose of business.
Comments : In view of the above refund would not be allowed on the unutilized
input tax credit on input services and capital goods.

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