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2020 (2) TMI 854 - AAR - GSTInput Tax Credit (ITC) - Interpretation of statute - meaning of word 'lapse' in Notification No. 20/2018-Central Tax (Rate) - Whether the meaning of word 'lapse' in Notification No. 20/2018-Central Tax (Rate) would mean lapse for refund or lapse for utilization of input tax credit for payment of output tax liability? - HELD THAT:- The refund is not available to accumulated input tax credit due to inverted duty structure in respect of specified inputs which remain unutilized. The inverted duty structure means rate of tax on inputs being higher than the rate of tax on the output supplies of such goods. Also vide notification dated 26-7-2018 proviso to Notification No. 5/2017-Central Tax (Rate), dated 28-6-2017 was inserted vide which applicability of notification dated 28-6-2017 was rescinded to the extent of input tax credit accumulated on supplies received on or after the 1st day of August, 2018, in respect of goods mentioned at Serial Numbers 1, 2, 3, 4, 5, 6, 6A, 6B, 6C and 7 supra. The notifications had been issued under clause (ii) of the proviso to subsection (3) of Section 54 of the Act. Section 54 of the Act provides for refund of accumulated credit on inputs on account of inverted duty structure, i.e., GST rate on inputs being higher than the GST rates on finished goods. However, proviso (ii) to Section 54(3) provides that in respect of notified goods, the refund of such accumulated input tax credit shall not be allowed. Notification No. 5/2017-Central Tax (Rate), dated 28-6-2017 has been issued in terms of this provision and it inter alia prescribes that refund of accumulated ITC on account of inverted duty structure shall not be allowed in respect of goods - the proviso has to be read with the principal part of the notification. A comprehensive reading of amended notification makes it clear that the proviso seeks to lapse only such input tax credit which is the subject matter of principal notification, i.e. accumulated credit on account of inverted duty structure in respect of notified goods. Thus in terms of amended notification, the input tax credit on account of inverted duty structure lying in balance after payment of GST for the month of July (on purchases made on or before the 31st July, 2018) shall lapse. We observe that the proviso has to be read with the principal part of the notification. A comprehensive reading of amended notification makes it clear that the proviso seeks to lapse only such input tax credit which is the subject matter of principal notification, i.e. accumulated credit on account of inverted duty structure in respect of notified goods. Thus in terms of amended notification, the input tax credit on account of inverted duty structure lying in balance after payment of GST for the month of July (on purchases made on or before the 31st July, 2018) shall lapse. The said notifications are exclusively dealt with the refund of accumulated input tax credit on account of inverted duty structure Only. When a requisite notification has been issued under a particular section, the provisions of said section spring into operation and an assessee, who is covered by the provisions of that section, is entitled to seek benefits thereunder. Notification No. 20/2018-Central Tax (Rate) dated 26-7-2018 deals with refund of inverted duty structure only.
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