QUESTION

Respected Sir / Madam, I want clarification on NET ITC it is only Goods or Goods and Services. If Only Goods, so what about Service like Job Work or any services relating to goods. Please Guide me for following reason. (Refund on account of inverted duty structure.) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula :— 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. Explanation:– For the purposes of this sub-rule, the expressions – (a) “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;

ANSWER

CGST RULE 89

(4) In the case of zero-rated supply of goods or services or both without payment of tax under bond or letter of undertaking in accordance with the provisions of sub-section (3) of section 16 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), refund of input tax credit shall be granted as per the following formula -

Refund Amount = (Turnover of zero-rated supply of goods + Turnover of zero-rated supply of services) x Net ITC ''Adjusted Total Turnover

Where, -

(A) "Refund amount" means the maximum refund that is admissible;

(B) "Net ITC" means input tax credit availed on inputs and input services during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or(4B)or bothCGST RULE 89
(5) In the case of refund on account of inverted duty structure, refund of input tax credit shall be granted as per the following formula:- 
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.

Explanation:- For the purposes of this sub-rule, the expressions '
(a) 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
(b) Adjusted Total turnover" and "relevant period" shall have the same meaning as assigned to them in sub-rule (4)

SECTION 54 OF CGST ACT

(3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period:

Provided that no refund of unutilised input tax credit shall be allowed in cases other than''
i) zero rated supplies made without payment of tax;
(ii) 'where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council

In our opinion in case of inverted duty structure refund is allowed only for inputs and not for input services. 

Further when the formula was amended vide Notification No. 21/2018 Central tax to include services in Turnover, then also the definition of Net ITC remained same and did not include ITC on services.

If the intention of law maker is that the net ITC should include both goods and services then it would have been specifically included in the definition of Net ITC given in explanation as in case of zero rated supplies.