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TMI BlogClarification regarding removal of restriction of refund of accumulated ITC on fabrics.X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of inverted duty structure on fabrics for the period upto the 31st July, 2018, 2. The said rates notification No. 5 (FTX.56/2017/56 dated 29th June, 2017) was issued in exercise of powers vested under section 54 of the Assam Goods and Services Tax Act, 2017 (hereinafter referred to as the "Assam GST Act"). It notifies the items on which refund of accumulated input tax credit on account of inverted duty structure is not allowed, Some of the items notified under this notification are fabrics. A total 10 categories of fabrics covered in the notification are as follows: Sl.No. Tariff item, heading, sub-heading or Chapter Description of Goods (1) (2) (3) 1. 5007 Woven fabrics of silk or of silk waste 2. 5111 to 5113 Woven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /144 dated 24th September, 2018), the following proviso has been inserted in the rate notification No. 5 (FTX.56/2017/56 dated 29th June, 2017). "Provided that, - (i) nothing contained in this notification shall apply to the 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, 6.4, 6B, 6C and 7 of the Table below,- and (ii) in respect of said goods, the accumulated input tax credit lying unutilised in balance, after payment tax for and upto the month of July, 2018, on the inward supplies received up to the 31st day of July 2018, shall lapse". 5. The doubts raised, with reference to changes made vide rate notification No. 20/2018 (F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 or principal notification, i,e, accumulated credit on account of inverted duty structure in respect of stated fabrics. The net effect of clause (ii) in the said proviso is that it provides for lapsing of input credit that would have been refundable in terms of section 54 of the Act, for the period prior to the 31st July, 2018, but for the restriction imposed vide said rate notification No, 5 (FTX.56/2017/56 dated 29th June, 2017) and that too, to the extent of accumulated TTC lying unutilised after making payment of GST upto the month of July, 2018, In other words. in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017/56 dated 29th June, 2017), The accumulated input tax credit determined by each supplier using the prescribed formula lying unutilised in balance after making the payment of GST for the month of July, 2018 shall lapse. Illustrations; (1) A manufacture who produces only manmade fibre fabrics. had a turnover of ₹ 5 crore for the period from July, 2017 to July 2018 the relevant period for fabrics on which refund was blocked subsequently by inserting entries in rate No. 5 (FTX.56/2017/56 dared 29th June, 2017).. Tax thereon is ₹ 25 lakh @ 5%), Assuming the net ITC availed on inputs, during this period, was ₹ 30 lakh. Applying the formula prescribed in rule 89 the accumulated ITC on account of inverted duty structure comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -25) The manner of calculation as provided in rule 89(5) would mutatis mutandis apply. 10.1 As illustrated, the application of formula prescribed in rule 89(5) ensures that ITC relating to capital goods and input services does not lapse. 11. However, a manufacturer may have closing stock of finished goods and inputs as on 31-7-2018, A doubt has been raised as to whether input tux relating thereto shall also lapse and concern has been expressed that this would amount to double taxation. It is clarified that the proposed amendment seeks to lapse only such credit that has been accumulated on inputs on account of inverted duty structure, Therefore, in ease a manufacturer, whose accumulated ITC is liable to lapse in terms of said notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or lapsing of accumulated input tax credit: A taxable person, whose input tax credit is liable to be lapsed in terms of said notification, shall calculate the amount of such accumulated ITC, in the manner as clarified above. This amount shall, upon self-assessment, be furnished by such person in his GSTR 3B return for the month of August, 2018. The amount shall be furnished in column 4B (2) of the return [ITC amount to be reversed for any reason (others)). Verification of accumulated ITC amount so lapsed may be done at the time of filing of first refund (on account of inverted duty structure on fabrics) by such person. Therefore, a detailed calculation sheet in respect of accumulated ITC lapsed shall prepared by the taxable person and furni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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