Question9: 1. Earlier i.e. before 13.10.2017 GST was charged @ 18% on Synthetic Filament yarn of Polyester PP.

2. Recently w.e.f. 13.10.2017 it is reduced to 12%.

3. Raw Material used in manufacture of Synthetic Filament yarn of Polyester & PP is Polyester & PP chips, which is having GST @ 18% before and after 13.10.2017.

From the above you will please find that before 13.10.2017 rate of GST on both Raw material & Finished goods was same @ 18% but w.e.f. 13.10.2017 rate of GST on finished goods is reduced to 12% and no reduction was made in the rate of raw material. Hence presently in our case rate of GST on RM is 18% & finished product is 12%. As a result there is an accumulation of GST credit.

Question: 1. Whether there is any prevailing law & procedure to claim refund of accumulated GST on account of the above mismatch.

2. What will be impact of GST on capital goods as GST of RM keeps on accumulating & GST on capital goods cannot be utilsed for a long time.

Please let us have your expert opinion on the above issue. Your early response in the matter is highly appreciated.


Answer: Question wise reply is given as under;

Q. No. 1 - Yes, you can claim refund of accumulated ITC on inputs subject to the provisions of Notification Nos. 05/2017-CT (Rate) dated 28.06.2017 and 15/2017-CT (Rate) dated 28.06.2017 vide which refund of accumulated input credit availed on certain kind of inputs has been denied. Provisions for claiming refund of accumulated ITC on inputs due to inverted tax ratio are contained under second clause of first Proviso to sub-section (3) of Section 54 of CGST Act, 2017 read with clause (h) of sub-rule (2) of Rule 89 of CGST Rules, 2017. Application for refund claim of accumulated ITC on inputs is to be filed in Form GST RFD-01 through Common Portal and will have to furnish a statement containing the number and date of the invoices received and issued during the relevant tax period to prove the accumulation of ITC on inputs due to inverted tax ratio.

Ans2 - There is no provision to claim refund of accumulated ITC on capital goods. You can go for EPCG to reduce the cost if you are doing export also.(Reply dt. 11/11/2017)