Clarification of unutilised input tax credit of GST paid on inputs in respect of exports of fabrics. - GST - States - 19/2018

GOVERNMENT OF WEST BENGAL DIRECTORATE OF COMMERCIAL TAXES 14, BELIAGHATA ROAD, KOLKATA-700015 TRADE CIRCULAR No. 19/2018 (Circular No. 18/18/2017-GST) DATED: 17.09.2018 Subject: Clarification of unutilised input tax credit of GST paid on inputs in respect of exports of fabrics. Doubts have been raised regarding the restrictions of refund of unutilised input tax credit of GST paid on inputs to manufacturer exporters of fabrics [falling under chapters 50 to 55 and 60 and headings 5608, 5801, 5806] under GST. 2.1 The matter has been examined. In this context, sub-section (3) of section 54 of the WBGST Act, 2017 provides as under: (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. 2.2 Based on the recommendations of the GST Council, Notification No.1129-F.T. [05/2017-State Tax(Rate)] dated 28.06.2017 [as amended from time to time] has been issued under clause (ii) of the proviso to sub-section (3) of section 54 of the WBGST Act, 2017, restricting refund of unutilised input tax credit of GST paid on inputs in respect of certain specified goods, including input tax credit of GST paid on inputs. 2.3 However, the aforesaid notification having been issued under clause (ii) of the proviso to sub-section (3) of section 54 of the WBGST Act, 2017, restriction on refund of unutilised input tax credit of GST paid on inputs will not be applicable to zero rated supplies, that is (a) exports of goods or services or both; or (b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit. 2.4 Accordingly, as regards export of fabrics it is clarified that, subject to the provisions of sub-section (10) of section 54 of the WBGST Act, 2017, a manufacturer of such fabrics will be eligible for refund of unutilised input tax credit of GST paid on inputs [other than the input tax credit of GST paid on capital goods] in respect of fabrics manufactured and exported by him. 3. Difficulty, if any, in the implementation of this circular should be brought to the notice of the Commissioner. 4. This circular shall be deemed to have come into force with effect from 16.11.2017. Sd/- (Smaraki Mahapatra) Commissioner, State Tax, West Bengal Date: 18.09.2018 Memo. 379 CT/PRO 3C/PRO/2018