QUESTION

We are claiming the Inverted duty structure refund, please advise if we export the goods with payment of GST than: 1. Their Input goods of ITC shall be considered for computation of Refund? 2. Export value shall be considered for computation of refund.?

ANSWER

FACTS OF THE CASE: Whether Export value and ITC claimed on inputs used for goods exported on payment of tax are to be considered for computation of refund in case of inverted duty structure.

LAW APPLICABLE: Rule 89 of CGST Rules:

Maximum Refund Amount = {(Turnover of inverted rated supply of goods and services) x Net ITC / Adjusted Total Turnover} - tax payable on such inverted rated supply of goods and services.

Net ITC shall mean input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both; and

Adjusted Total Turnover means the sum total of the value of-
(a) the turnover in a State or a Union territory, as defined under clause (112) of section 2, excluding the turnover of services; and
(b) the turnover of zero-rated supply of services determined in terms of clause (D) above and non-zero-rated supply of services, excluding-
    (i) the value of exempt supplies other than zero-rated supplies; and
   (ii) the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both, if any, during the relevant period.

SECTION 2 OF CGST ACT

(112) 'turnover in State' or 'turnover in Union territory' means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis) and exempt supplies made within a State or Union territory by a taxable person, exports of goods or services or both and inter-State supplies of goods or services or both made from the State or Union territory by the said taxable person but excludes central tax, State tax, Union territory tax, integrated tax and cess;

INTERPRETATION: The definition of Adjusted total turnover as given in Sub Rule (4) of Rule 89 of CGST Rules means the sum total of the value of the turnover of supply of goods and services and excludes the value of exempt supplies other than zero-rated supplies and the turnover of supplies in respect of which refund is claimed under sub-rule (4A) or sub-rule (4B) or both.

Sub rule 4A is related to Deemed Exports and 4B is related to Merchant Exporter.

CONCLUSION:

Adjusted total turnover for refund of inputs is sum total of Inverted turnover and zero rated turnover. Therefore Export value shall be taken into consideration for computation of maximum refund amount. Also ITC of inputs used for Exported goods on payment of tax is to be taken into consideration. (Reply dt. 21/12/2021)