Goods and Services Tax – Started By: – Vinay Jhawar – Dated:- 9-9-2018 Last Replied Date:- 17-9-2018 – Can one claim refund of unutilised input tax credit of compensation cess paid on coal purchase, in application for inverted duty structure along with CGST and SGST refund. – Reply By DR.MARIAPPAN GOVINDARAJAN – The Reply = In my view it can be claimed. Views of experts are solicited. – Reply By Yash Jain – The Reply = Sir, It's a typical issue, but prima facie following is the status on refund on compensation cess, 1. If your products are sold by way of charging tax, then irrespective of rate charged on final products (whether or not final product is subject to cess in addition to Cgst/sgst or igst) , then compensation cess is not Refundable , as input of cess can be utilized Only against payment of output cess. 2. For exports – If goods are exported by way of charging GST , (IGST paid on exports (reversal of input and then claiming refund of igst) , in such situation also refund
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h advance ruling authority to determine whether (by chance, if any) we can get refund. It will cost only R's. 10000/-, but will provide, a definite clarity. Rgds – Reply By DR.MARIAPPAN GOVINDARAJAN – The Reply = You are correct. – Reply By Gorantla Bhaskar Rao – The Reply = Dear querist,I agree with the experts. As of now the provisions are clear that only input cess can be utilised for payment of output cess. Hence, refund is not possible. – Reply By Yash Jain – The Reply = Dear Sir, The Provision with regard to refund for compensation cess is very much clear that Refund for Compensation cess on coal can be availed if and only if the Goods as being manufactured from Coal are being exported under Zero rate exports under Bond/LUT . In rest all the cases (Even for Exempt Supply) Refund for compensation cess will not be available. However it is always advisable to approach the AAR before refund : Reason: It will safeguard you from any adverse remarks from the Department (U/s Sec 74 –
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simmilar for bith inverted and zero rated supply refund (only service not allowed in inverted structure) – Reply By Yash Jain – The Reply = Sir,For Advance Ruling – Well Yes we can go for advance ruling, but If the Circular Allows one to take refund for Cess then why to go for such ruling. It will come after 90 days and that too chances of it being dismissed is high as we already have circular/clarification. Advance ruling cannot override the GST Law.Cess for Inverted duty structure : We pay ₹ 400/- PMT as cess on coal. Say the Coal is Trading at ₹ 8500 to 9000 (PMT) (This being indigenous procured coal) (Say 400/ 8500 = 5% Say) and ₹ 11500/- (400/11500 = 3% Say). Your final product must be taxable at more than 5%, so it will be impossible to prove that accumulation is on account of inverted duty structure. As we pay advoleram rate, it is not an inverted duty structure as it does not have any output GST Tax.Also another reason is that, Input is cess is allowed only fo
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