A Pvt. Ltd. company is registered under Supplier of Job work service of Textile dying & other process where job worker used own goods (chemicals) and take input credit of the same. Output supplies GST rate is 5%
Input raw material and services are under GST rate of 12% and 18% .
My question Is company is eligible for refund of excess credit under Inverted duty structure .
As no refund allow of excess credit to yarn units .
 

Answer   Notification No. 05/2017 Central Tax (Rate) dt 28-06-2017 put restriction on refund of tax in respect of Inverted Tax Ratio in certain cases. The table of Notification contains HSN code of outward supply to which restriction applies. These are in relation to Textile : 5007, 5111 to 5113, 5208 to 5212, 5309 to 5311, 5407, 5408, 5512 to 5516, 5608, 5801, 5806, 60.

But you are engaged in providing service of job work. Your HSN code is 9988. So this Notification could not apply to you.

Although this Notification contains "in respect of which no refund of unutilised input tax credit shall be allowed_ __ accumulated on account of rate" is a debatable issue , whether the processing will be considered as supply in relation to Textile will be restricted or not. We are of the view that the restriction is relating to specified goods and not for services done relating to these. (reply dt. 05/07/2018)