Inverted Tax Rate - Refund, Goods and Services Tax - GST

[Ethirajan Parthasarathy]

A GST registered person renders works contract service to private parties as well as government bodies. The applicable GST rates for this kind of service to private parties is 18% & to government it is 12% vide notification no.20/2017 dt:22/08/2017. The input materials suffer tax @ 18% & 28%. In this situation, is the registered person entitled to claim refund u/s 54 of CGST Act. If yes, is there any formula to arrive at the refund in view of two different rates for the same service with identical inputs.

Posts / Replies

[Shilpi Jain]

If the output services are not falling under entry 5(b) of schedule II the refund should be eligible considering the formula prescribed in rule 89(5). Also refer to circular 125 para 53 and 54 which states that the credit relating to all the inputs would be taken for calculation of refund.

You should apply for refund of the input services and the capital goods also considering the recent High Court decision in the case of VKC Footsteps = 2020 (7) TMI 726 - GUJARAT HIGH COURT