Question

A manufacturing knitted fabrics falling under HSN 60059. Input Tax Credit is 18% and Output Tax Credit is 5%. Let me know whether we are eligible for refund as per Circular No. 56/30/2018- GST dated 24/08/2018.

Answer

Vide Notification no. 20/2018 Central Tax (Rate) the restriction on refund of accumulated ITC on account of inverted duty structure on certain fabrics specified in Notification No. 5/2017 Central Tax (Rate) has been removed with prospective effect from 1st August 2018.

Fabrics falling under HSN 60059 is one such specified fabric. Therefore you are eligible for refund of Accumulated ITC on account of inverted duty structure w.e.f. 1st August 2018 but balance of ITC accumulated on account of inverted duty structure till 31st July 2018 will lapse. Manner and calculation of amount to be reversed is clarified in Circular No. 56/30/2018 enclosed herewith. (Reply dt.24/09/2018)