GST UPDATE

????Desk of CA. Praveen Sharma Series-586????

Draft Reply to Notice for Rejection of Refund Application filed under Section 54(3)(ii) of CGST

?We are in receipt of the above-referred notice rejecting our refund claim for the period ____ under Section 54(3)(ii) of the CGST Act, 2017, stating that tax rates on raw materials and finished goods are not different.

?We respectfully submit that this rejection is not legally justified. Our refund claim is based on the fact that we pay a higher rate of tax on inputs, while the output is taxed at a lower rate, resulting in an accumulation of Input Tax Credit (ITC) due to the inverted duty structure.

 ?As per Section 54(3) and Rule 89(5) of the CGST Rules, 2017, we are entitled to claim the refund of unutilized ITC.

?The rejection appears to be based on a misinterpretation of the inverted duty structure and the refund mechanism prescribed in the law. The GST law does not require a one-to-one correlation between inputs and outputs, and refunds are calculated GSTIN-wise, not product-wise. 

?The claim is valid as per the statutory provisions under the CGST Act, 2017, and relevant rules, which allow refund in cases of inverted tax structure where input tax exceeds output tax.

CA. Sharma Praveen

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