Clarification on refund related issues

Circular No.: 181/13/2022-GST
Date of Circular: 10th November 2022
Relevant Sections and Rules:

• CGST Act, 2017:
  • Section 54(3): Refund of unutilised input tax credit under inverted duty structure
  • Section 168(1): Power to issue instructions
• CGST Rules, 2017:
  • Rule 89(5): Formula for refund under inverted duty structure
• Notifications Referenced:
  • Notification No. 14/2022–CT dated 05.07.2022
  • Notification No. 09/2022–CT (Rate) dated 13.07.2022 (effective from 18.07.2022)

Summary of Clarifications Provided:

1. Applicability of Amended Refund Formula under Rule 89(5):
   The amendment made via Notification No. 14/2022–CT to the formula under Rule 89(5) (used for refund of unutilised ITC in cases of inverted duty structure) is not retrospective.
   It is applicable prospectively only, i.e., to refund applications filed on or after 05.07.2022.
   Refund claims filed before 05.07.2022, even if pending as on that date, shall be processed using the earlier formula.
2. Applicability of Refund Restriction for Goods under Chapter 15 and 27:
   The restriction on refund of unutilised ITC for certain goods under Chapter 15 and 27 (imposed via Notification No. 09/2022–CT (Rate) and effective from 18.07.2022) shall apply only prospectively.
   That is, it shall apply only to refund applications filed on or after 18.07.2022.
   Any refund applications filed before 18.07.2022 for the specified goods are not subject to the restriction, even if those applications are pending as of the date of implementation.

Source: Circular No.: 181/13/2022-GST