IT Commissioner rules on GST refund

IT Commissioner rules on GST refund

Reimbursement not admissible to the extent of non-reversal of Input Tax Credit

The Commissioner of Income Tax (Appeals) has held that the Goods and Services Tax (GST) refund is not admissible to the extent of non-reversal of Input Tax Credit (ITC).

The appellant, Stone Craft, India is a 100 percent exporter. It is engaged in the business of buying, processing and exporting natural stone, but does not deal in any domestic supply of its goods. The appellant filed a refund claim under the Central Goods and Services Tax Act, 2017, in respect of the unutilized ITC.

The appellant contested the impugned orders. It said that since the refund claims had been processed electronically, keeping in mind the limitation of the electronic system, the detailed grounds of the refund sanction/rejection could not be provided. Also, a detailed calculation chart of non-admissible refunds had not been given in the form due to the limitations of the electronic system.

The Commissioner put on hold the refund claim of Rs.60,06,181 for the period of March 2020 to May 2020. It was noticed that as per the GST return filed for the month of March 2020, the applicant, along with zero-rated supply of goods worth Rs.2,44,81,281, had also shown an exempted supply of Rs.11,16,382. But had not reversed the ITC in terms of the CGST Act on account of the exempted supply.

Since the applicant had not reversed the ITC, the officer, during the examination of the refund quantified 'Net ITC' in terms of the Act. He found that the amount refundable to the taxpayer was Rs.54,44,354 and not the admissible refund amount of Rs.5,61,827.

In view of the verification report submitted by the officer a show cause notice was issued to the appellant with the remarks 'refund not admissible.'

The submissions made in response by the appellant were not found tenable. Accordingly, a refund of Rs.54,43,390 was found admissible and sanctioned.