The refund shall be furnished to the credit that collects on inputs beneath the inverted duty for the GST regime said Supreme court. As per the order, the Madras High court placed it alongside the order of the Gujarat high court.
The appeal has been acknowledged which the GST department urged to go through again inside the formula of the refund calculation.
The inverted duty structure reveals the more special taxes upon the input and lower tax on output or the ultimate product. There are various products like footwear, which have an inverted duty structure. But Section 54(3) of the CGST Act orders refund and rule 89(5) of CGST Rules gives a formula for the same, the amendment has changed the formula which started on July 1, 2017.
The improvised formula does not include the input services from the ITC range seen under the refund calculation. Hence the substituted rule (Rule 89(5) of the CGST Rules) refused the refund on the ITC claimed on the input services and permitted the refund of the income tax credits only on the inputs.
What is Madras High Court Mentioned?
Madras high court towards the concern of Tvl.Transtonnelstroy Afcons Joint Venture vs Union of India, held in a different way. It specified that the “Refund is a statutory right and the extension of the benefit of refund only to the unutilised credit that accumulates on account of the rate of tax on input goods being higher than the rate of tax on output supplies by excluding unutilised input tax credit that accumulated on account of input services is a valid classification and a valid exercise of legislative power.”
What is Circulated by the Gujarat High Court?
But the Gujarat High court towards the concern of VKC footsteps vs Union of India ruled that the taxpayer’s right to claim the refund towards the input services beneath the inverted duty structure beneath GST. Strict on the opinion on the explanation of the rule that does not accept the refund of the unused input tax furnished upon the input services which comes under the ITC collected towards the inverted duty structure is “ultra vires the provision of Section 54(3) of the CGST Act, 2017.”
