Goods and Services Tax – GST – By: – CA DEV KUMAR KOTHARI – Dated:- 4-10-2018 Last Replied Date:- 13-12-2018 – Relevant provisions: Sections of CGST Act Sec 54(3)(ii) – Refund of tax Sec 2(52) – Meaning of goods Sec 2(106) – Tax period Sec 2(112) – Adjusted total turnover Rule 89(5) of the CGST Rules Notification No. 5/2017 – Central Tax (Rate) dated 28.06.2017 Notification No. 20/2018 – Central Tax (Rate) dated 26.07.2018 Circular No. 56/30/2018 dated 24.08.2018 Synopsis: Accumulation of input tax credit happens when tax paid on inputs is more than output tax liability. Such unutilized tax credit will have to be carried over to the next financial year till it can be utilized by the registered person for payment of output tax liability. However GST Law permits refund of such ITC in two scenarios., namely if such credit accumulation is on account of zero rated supplies or inverted duty structure, subject to certain exceptions. Refund in some other situations is also desirable, otherwis
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to 5516 Woven fabrics of manmade staple fibres 7. 60 Knitted or crocheted fabrics [All goods] Now government has issued another notification no 20/2018 on 26/07/2018 giving relief to fabrics manufactures to claim refund of excess ITC accumulated on and after 01.08.2018. Meaning of inverted tax structure Inverted tax structure means a situation where input tax rate in higher than output tax rate on outward supplies. This results in accumulation of ITC in the hands of registered persons. In this articles author want to discuss the situation of inverted tax structure in relation to textiles industry The Indian textile industry in highly fragmented consisting of small scale and tiny units. Most of the weavers are uneducated and operating loom with the help of family member and uneducated laborers. The textile industry is labour intensive having small scale operations. The textile industry can be divided into four regiments. 1) Cotton Textile 2) Synthetic Textile 3) Manmade Textiles 4) oth
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notification, only input tax credit accumulated of in respect of goods is eligible for refund. According to this notification, what happens to excess credit accumulated on account of services or capital goods or ITC accumulated on account of stock- in- trade. Credit accumulated up to 31st July shall lapsed but according to Sec 54(3), a registered person cannot claim refund. It is nowhere mentioned in the law that excess duty will lapse. Again Government issued one more circular 56/2018 on 24.08.2018 clarifying doubts regarding unutilized input credit on capital goods and services and also on stock in hand as on 31.07.2018. Government has clarified that inverted duty will lapse only on input goods only. A registered person may carry forward ITC accumulated on account of capital goods and services till next financial year till it can be utilized. A manufacturer having unutilized ITC on stock and inputs as on 31.07.2018 will not be required to reverse the ITC and same may be excluded for
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ver of zero-rated supply of goods means the value of zero-rated supply of goods made during the relevant period without payment of tax under bond or letter of undertaking; (D) Turnover of zero-rated supply of services means the value of zero-rated supply of services made without payment of tax under bond or letter of undertaking, calculated in the following manner, namely:- Zero-rated supply of services is the aggregate of the payments received during the relevant period for zero-rated supply of services and zero-rated supply of services where supply has been completed for which payment had been received in advance in any period prior to the relevant period reduced by advances received for zero-rated supply of services for which the supply of services has not been completed during the relevant period; (E) Adjusted Total turnover means the turnover in a State or a Union territory, as defined under sub-section (112) of section 2, excluding the value of exempt supplies other than zero-rat
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In my view the power to deny the refund of ITC can be compared with the power to reversal of ITC itself. Therefore justifying the issue of Notification No. 20/2018 CT (Rate) dated 26.07.2018 vide Circular No. 56/30/2018 GST dated 24.08.2018 to the extent refund is not allowed, seems not justified. Request to readers: Readers are requested to send their views, feedback and suggestion on the subject for brain storming and to improve the understanding of the subject and to remove mistake, and deficiency, if any in the understanding. For this purpose email id of authors By CA Rajendra Kumar Rathi, Erode. rkrathigst@gmail.com – Reply By SUDHIRKUMAR SHAH – The Reply = sir as per my understanding, following steps are required to be follwedITC-capital goods-input services-stock on 31-07-2018= Net ITCNOW, LAPSE OF ITC =NET ITC X (INVERTED DUTY TURNOVER / ADJ. TOTAL TURNOVER)NOW THE QUESTION IS WHETHER I SHOULD TAKE ITC AS CLOSING BALANCE IN 31/07/2018 IN MY ECLOR I SHOULD TAKE ITC AS TOTAL ITC
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