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MCQ Self Challenge # 0070 on Special Provisions relating to Refund of Unutilized Input Tax Credit

 

Special Provisions relating to Refund of Unutilized Input Tax Credit

 

Dear Professional Seniors & Friends,
Warm Greeting!

Here is the Next post of #MCQ on concept based practical professional knowledge on special provisions relating to refund of unutilized input tax credit in a unique manner to be self answered by participants. The detailed answer of these MCQs shall be posted next day for the self assessment of the participants.

MCQ 70.1: B is having ITC accumulated due to inverted tax structure in respect of supply of woven fabrics of silk.

A) Refund of ITC accumulated due to inverted tax structure are always allowed.

B) Refund of ITC accumulated due to inverted tax structure are always not allowed.

C) Refund of ITC accumulated due to inverted tax structure are not allowed for goods or services notified by Council and woben fabric is notified by the government.

D) None of the above.

MCQ 70.2: What if in above question, accumulation of ITC due to inverted tax structure is on account of export of woven fabrics of silk?

 Refund of ITC accumulated due to inverted tax structure on account of export are always allowed.

 Refund of ITC accumulated due to inverted tax structure on account of export are always not allowed.

 Refund of ITC accumulated due to inverted tax structure on account of export are not allowed for goods or services notified by Council and woben fabric is notified by the government.

 None of the above.

Sincere Regards

CA Sanjay Kumar Agrawal
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Answer MCQ Self Challenge # 0070

 

Dear Professional Seniors & Friends,

Warm Greetings!

 

This post of MCQ is on amendment on provisions in GST act which is giving effect to our MCQ published earlier(Weekend MCQ 6 dated 25.05.2018) relating to provisions of refund of unutilized input tax credit.

 

Answer to MCQ 70.1: D) None of the above.

 

Answer to MCQ 70.2: A) Refund of ITC accumulated due to inverted tax structure on account of export are always allowed.

 

Practical Analysis for MCQ 70.1& 70.2:-

 

Provisions before Notification No. 20/2018 Dated: 26th July, 2018 26 came into force

 

  • Sec 54(3) provides for cases where refund of unutilized input tax credit shall be allowed i.e.
    • Zero rated supplies – always allowed
    • Where ITC has been accumulated due to inverted tax structure – other than goods or supplies that have been notified by council

 

  • wide Notification No. 5/2017 dated 28th June,2017 notified the Supplies in respect of which refund of ITC accumulated due to inverted tax structure will not be allowed. Supply of woven fabric of silk is notified in that list.

 

Effects of Notification No. 20/2018-Central Tax (Rate), Dated: 26th July, 2018

 

  1. Notification No. 20/2018 is brought into force to nullify the effect of Notification No. 5/2017 for goods like woven fabric.

 

  1. Fabrics attract GST at the rate of 5% subject to the condition that refund of accumulated ITC on account of inversion will not be allowed. However, considering the difficulty faced by the Fabric sector on account of this condition, CBIC has allowed refund to fabrics on account of inverted duty structure.
  2. CBIC has provided that nothing contained in the notification no. 5/2017 dated 28th June,2017 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, 6A, 6B, 6C and 7 of the Table below (i.e. woven fabrics); and
  3. In respect of said goods, the accumulated input tax credit lying unutilised in balance, after payment of tax for and upto the month of July, 2018, on the inward supplies received up to the 31st day of July 2018, shall lapse.
  4. Based on the above analysis, correct answer MCQ 70.1: D) None of the above.
  5. Correct answer MCQ 70.2 : A) Refund of ITC accumulated due to inverted tax structure on account of export are always allowed.

 

(Disclaimer: The objective of the MCQ post is just to discuss the concept, it may happen, by change of facts, the answer may be different. Please do not treat this as professional opinion; you can definitely have your own opinion.)

 

Sincere Regards!

 

CA Sanjay Kumar Agrawal

Mobile: 9810116321 WhatsApp: 8799772245

 

To access MCQ posts regularly, please Join Telegram Channel:
https://t.me/caSanjayKumarAgrawal

 

For All MCQ post please click on:

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