Export of Goods Leviable to NIL Rate of DutyAllowability of Refund under Section 54(3)D. Ramachandra Rao

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The Tax Publishers GST--Export of Goods Export of Goods Leviable to NIL Rate of Duty--Allowability of Refund under Section 54(3) D. Ramachandra Rao The learned author seeks to discuss an issue as to whether refund under inverted duty structure is allowable where the export of goods is leviable to NIL rate of Duty. The discussion is based on the relevant statutory provisions, CBIC clarification and a recent Orissa High Court decision in the case of National Ventures Pvt. Ltd. 1. Refund of unutilized input tax credit According to sub-section (3) of section 54 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period. As per proviso to sub-section (3) of section 54, refund of unutilized input tax credit shall be allowed only in the following cases, namely : (a) zero-rated supplies made without payment of tax (i.e. export under Bond or LUT); or (b) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (i.e. inverted duty structure). As per first proviso to sub-section (3) of section 54, no refund of unutilised input tax credit shall be allowed in cases other than-- (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council. Also, as per second proviso to sub-section (3) of section 54, no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty. The term "export duty" is not defined under the CGST Act. In this regard, the issue arose for discussion as to whether refund of unutilised ITC under section 54(3) would be allowable in those case, where the export of goods is leivable to Nil rate of duty. 2. CBIC clarification in Circular No. 160/16/2021-GST, dt. 20-9-2021 SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Export of Goods

Export of Goods Leviable to NIL Rate of Duty--Allowability of Refund under Section 54(3)

D. Ramachandra Rao

The learned author seeks to discuss an issue as to whether refund under inverted duty structure is allowable where the export of goods is leviable to NIL rate of Duty. The discussion is based on the relevant statutory provisions, CBIC clarification and a recent Orissa High Court decision in the case of National Ventures Pvt. Ltd.

1. Refund of unutilized input tax credit

According to sub-section (3) of section 54 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act"), a taxable person may claim refund of any unutilized input tax credit at the end of any tax period. As per proviso to sub-section (3) of section 54, refund of unutilized input tax credit shall be allowed only in the following cases, namely :

(a) zero-rated supplies made without payment of tax (i.e. export under Bond or LUT); or

(b) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (i.e. inverted duty structure).

As per first proviso to sub-section (3) of section 54, no refund of unutilised input tax credit shall be allowed in cases other than--

(i) zero rated supplies made without payment of tax;

(ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council.

Also, as per second proviso to sub-section (3) of section 54, no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to export duty.

The term "export duty" is not defined under the CGST Act. In this regard, the issue arose for discussion as to whether refund of unutilised ITC under section 54(3) would be allowable in those case, where the export of goods is leivable to Nil rate of duty.

2. CBIC clarification in Circular No. 160/16/2021-GST, dt. 20-9-2021