Question And Answer
Subject: Calculation of refund amount in case of inverted duty rate under GST
Querist: Sahil Goyal
Answered by:
Tags: ,
Date: April 7, 2022
Query asked by Sahil Goyal

Where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies, refund can be applied under Section 54 of the CGST Act, 2017 read with Rule 89 of the CGST Rules, 2017.

Please advise how wiil we calculate the eligible refund amount in the following case wherein at the end of the tax period there is closing stock much higher than the sale of goods.

For Example

Information Pertaining to Inward Supplies

Particulars                    Value               Rate of GST     GST Amount

Inward supplies            Rs 100 Lakhs             18%     Rs 18.00 Lakhs

Inward supplies            Rs 300 Lakhs               28%     Rs 84.00 Lakhs

Total                            Rs. 350 Lakhs                          Rs 102.00 Lakhs

Note:- Both types of inward supplies were used for manufacturing of outward supply attracting GST @5%.


Information Pertaining to Outward Supplies

Particulars                                            Value               Rate of GST     GST Amount

Turnover of Inverted Rated Supply.      Rs 125 Lakhs   5%  Rs 6.25 Lakhs

Turnover of Other Supplies.                 Rs 10 Lakhs     28%               Rs 2.80 Lakhs

Total                                                    Rs 135 Lakhs                           Rs 9.05 Lakhs

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Answer given by

The query appears to have been raised on doubt as to whether refund is eligible in respect of eligible goods in stock in tax period for which the application is being filed.
In my opinion, one has to go by formula given in Rule 89(5) for inverted duty structure refund. As per said formula no cognizance is required to be taken about eligible goods in stock.
In other words, refund should be claimed irrespective of fact that eligible goods are in stock.
It is possible that in future the goods may not be sold like gifted or lost etc.. The issue of reversal as per ITC provisions of Section 16/17 may arise. However, so far as claiming refund is concerned it should be on all input tax irrespective of fact that certain eligible goods are in stock.

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