Question38:
We are manufacturer of parts of railways boggies and other parts of metal which is being sold to railway and others. Actually the scenario is that we are purchasing raw material with 18% of GST while selling our goods to railways with 5 % of gst. Due to different in gst rate in purchase and sale a large amount of GST input are getting accumulated/blocked in the the end of the year. Purchase HSN code and Rate of GST of major items:
7208. With 18
8607 with 18
7318 with 18
Sale hsn code and gst rate of major items:
8607 with 5 %
Now pls advise us what to do for gst amount which is being accumulated in a large amount due above scenario.
Can we claim GST Refund if sale to Railway under HSN code 8607 ??

Answer
The refund of credit of ITC in case of inverse ratio of tax is restricted under Notification No. 5/2017 dated 28-06-2017 of CGST.
As per this Notification (S. No. 14) refund of tax in your case is restricted. You can use this credit for providing any other service. The refund is possible only in case of export to the extent of input used to manufacture export product.

You are requested to please check why your supplier is charging 18% instead of 5% (S. No. 241, Schedule I to Notification No. 01/2017) on your supply made under Chapter Heading No. 8607.
We are enclosing herewith Notification No. 5/2017 and Circular No. 30/2018 dt. 25-01-2018. (Reply dt. 18/4/2018)