ITC Ledger Not Debited in Sequence Prescribed in Circular—Validity of Denial of Refund of Input Tax Credit—Vineet Tiwari

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The Tax Publishers GST--Refund Under Inverted Debit Structure ITC Ledger Not Debited in Sequence Prescribed in Circular--Validity of Denial of Refund of Input Tax Credit Vineet Tiwari The learned author seeks to analyse an issue as to whether refund claim filed by a taxpayer under sub-section (3) of section 54 for refund of unutilized input tax credit can be rejected merely on the ground that the electronic credit ledger was not debited in the sequence prescribed in Circular No. 59/33/2018-GST, dt. 13-03-2019. The related issue is being discussed in the light of a recent Gujarat High Court decision in the case of Balkrishna Industries Ltd. v. Union of India 2022 TaxPub(GST) 1904 (Guj-HC). 1. Introduction Section 54 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act) deals with refund of tax. The provisions relating to refund of excess balance of input tax credit (ITC) are enshrined under sub-section (3) of section 54. Accordingly, a registered person may claim refund of any unutilised input tax credit at the end of any tax period in the following cases: (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. The manner of calculation of refund amount in case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017, is prescribed under sub-rule (4) of rule 89 of the CGST Rules. The manner of computation of refund amount to be computed is also prescribed in para 3 of Circular No. 59/33/2018-Central Tax, dt. 13-03-2019 according to which in case of refund of unutilized input tax credit (ITC for short), the common portal calculates the refundable amount as the least of the following amounts: SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Refund Under Inverted Debit Structure

ITC Ledger Not Debited in Sequence Prescribed in Circular--Validity of Denial of Refund of Input Tax Credit

Vineet Tiwari

The learned author seeks to analyse an issue as to whether refund claim filed by a taxpayer under sub-section (3) of section 54 for refund of unutilized input tax credit can be rejected merely on the ground that the electronic credit ledger was not debited in the sequence prescribed in Circular No. 59/33/2018-GST, dt. 13-03-2019. The related issue is being discussed in the light of a recent Gujarat High Court decision in the case of Balkrishna Industries Ltd. v. Union of India 2022 TaxPub(GST) 1904 (Guj-HC).

1. Introduction

Section 54 of the Central Goods and Services Tax Act, 2017 (in short "the CGST Act) deals with refund of tax. The provisions relating to refund of excess balance of input tax credit (ITC) are enshrined under sub-section (3) of section 54. Accordingly, a registered person may claim refund of any unutilised input tax credit at the end of any tax period in the following cases:

(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.

The manner of calculation of refund amount in case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017, is prescribed under sub-rule (4) of rule 89 of the CGST Rules.

The manner of computation of refund amount to be computed is also prescribed in para 3 of Circular No. 59/33/2018-Central Tax, dt. 13-03-2019 according to which in case of refund of unutilized input tax credit (ITC for short), the common portal calculates the refundable amount as the least of the following amounts: