Inverted rated ITC refund:
Bombay High court has issued a notice in a writ filed for a refund of ITC. Inverted rated ITC refund is available in GST. Let us understand the whole case. In GST we are eligible for a refund of ITC where there is inverted rated supply. It means where the rate of GST on inward is high than the rate of tax on outward supply. In this case, ITC will always accumulate. The GST Act provides for the refund of accumulated ITC in this case. Section 54(3) provides for the return of ITC for IRS.
Rule 89(5) of CGST Rules provide for the formula of its calculation. The definition of net ITC in Rule 89(5) excludes the ITC of input services and capital goods. Taxpayers were opposing it. It is their demand that ITC of input services shall also be allowed. Some other cases are also listed in various high courts on the same issue.
There is hope that some positive outcome can be there. It can provide relief to many taxpayers. Thus a relief is expected.
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