CBIC Issues Clarification On Refund Related Issues

The Central Board of Indirect Taxes and Customs (CBIC) has issued a clarification on GST refund-related issues.

The CBIC has received various representations from the trade and field formations seeking clarification on various issues pertaining to the implementation of the formula prescribed under Rule 89(5) of the CGST Rules, 2017 and the restriction on refund of unutilised ITC on account of inverted duty structure in the case of the supply of certain goods.

The formula in sub-rule (5) of rule 89 of the CGST Rules, 2017, has been modified by Notification No. 14/2022-Central Tax dated July 5, 2022. The amendment is not clarificatory in nature and is applicable prospectively with effect from 05.07.2022.

The Board clarified that the amended formula under sub-rule (5) of rule 89 of the CGST Rules, 2017 for the calculation of refunds of input tax credits on account of inverted duty structures would be applicable in respect of refund applications filed on or after 05.07.2022. The refund applications filed before July 5, 2022, will be dealt with as per the formula as it existed before the amendment made vide Notification No. 14/2022-Central Tax dated July 5, 2022.

The restriction imposed by Notification No. 09/2022-Central Tax (Rate), dated July 13, 2022, on the refund of the unutilized input tax credit on account of inverted duty structure in the case of specified goods falling under Chapters 15 and 27, would apply only prospectively.

The Board clarified that the restriction imposed by the notification would be applicable to all refund applications filed on or after July 18, 2022, and would not apply to refund applications filed before 18.07.2022.

Circular No. 181/13/2022-GST

Date: 10.11.2022

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