NO.F.1 -11(8)-TAX/2015/8299-8305

circulars · 2017 · Tripura

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Parent: The Tripura State Goods and Services Tax Act, 2017 (f49bb5282224ef697f4ea1a4f21117d556e6bec9)

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NO.F.1 -11(8)-TAX/2015/8299-8305 GOVERNMENT OF TRIPURA OFFICE OF THE CHIEF COMMISSIONER OF STATE TAX PANDIT NEHRU COMPLEX, GURKHABASTI AGARTALA, TRIPURA WEST, PIN-799006. Dated, Agartala, the 5 th September , 2018. Circular No.10/2018 – – GST (State) To The Additional Commissioner of State Tax / Assistant Commissioner of State Tax / Superintendent of State Tax (All)/ Inspectors of State Tax (All) Subject: Clarification regarding removal of restriction of refund of accumulated ITC on fabrics -reg. The Department of Revenue, Tax Research Unit vide Circular No. 56/30/2018–GST dated 24 th August, 2018 has issued clarifications regarding the applicability and intent of the Notification No. 20/2018 -Central Tax (Rate) dated 26.07.2018 (which seeks to amend Notification No. 5/2017 -Central Tax (Rate) dated 28.06.2017) regarding removal of restriction of refund of accumulated ITC on fabrics , which is annexed herewith. The corresponding State Notifications are 20/2018-State Tax (Rate) dated 28.07.2018 and 5/2017State Tax (Rate) dated 29.06.2017 to the Notification No. 20/2018-Central Tax (Rate) dated 26.07.2018 and Notification No. 5/2017 -Central Tax (Rate) dated 28.06.2017 respectively. In exercise of powers conferred by section 168 of the Tripura State Goods and Services Tax Act, 2017 (Tripura Act No. 9 of 2017) for the purpose of uniformity in the implementation of the Act it is instructed to follow the clarifications issued vide Circular No. 56/30/2018 – GST dated 24 th August , 2018 by the Department of Revenue, Tax Research Unit . Enclo.:1. Circular No. 56/30/2018 – GST. Copy to: The Principal Secretary, Finance, Government of Tripura for favour of kind information. The Assistant Statistical Officer, Statistical Section, O/o the Commissioner of Taxes & Excise, Agartala w

Rule TOC

6 · The matter has been examined. Section 54 of the CGST Act , 2017 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) has been issued in terms of this provision and it interalia prescribes that refund of accumulated ITC on account of inverted duty structure shall not be allowed in respect of fabrics as mentioned in para 2 . Therefore, the restriction of refund of accumulated lTC under notification No . 5/2017 -Central Tax (rate) dated 28.06.2017 is applicable only in respect of refund of accumulated lTC on inputs . This notification does not put any restriction in relation to the ITC on input services and capital goods.

7 · The proviso has to be read with the principal prut 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 stated fabrics. The net effect of clause (ii) in the said proviso is that it provides for lapsing of input tax 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 notification No . 5/2017 --Central Tax (Rate) and that too to the extent of accumulated ITC lying unutilised after making payment of GST upto the month of July , 2018. In other words , in terms of amended notification , t the input

8 · As the notification No. 5/2017-Central Tax (Rate) does not put any restriction in respect of ITC on input services and capital goods, therefore the proviso now inserted in the said notification No. 5/2017 --Central Tax (Rate) vide notification No. 20/2018 does not affect the ITC availed on input services and capital goods.

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.