No Input GST Refund for Services Under Inverted Duty: SC

The Supreme Court said on Monday that refund of tax credit cannot be claimed for input services under the Goods and Services Tax regime’s inverted duty structure.

The apex court also asked the GST Council to look into the anomalies related to the issue.

Inverted duty refers to tax on inputs being higher than the duty on a finished product.

The top court in its order set aside appeals filed against a Madras High Court judgement on the matter and affirmed the lower court’s decision in favor of the revenue department.

“The judgment of the Madras High Court needs to be affirmed by dismissing the appeals challenging that verdict, while the appeals against the judgment of the Gujarat High Court by the Union of India should be allowed,” a division bench of Justice MR Shah said in the order.

The Madras HC had held last year that Section 54(3) of the Central Goods and Service Tax (CGST) Act – which allows for a refund of Input Tax Credit (ITC) where the accumulation is due to an inverted duty structure – does not infringe on Article 14 of the Constitution. It said that refund of tax paid on inputs and not input services was available under the inverted duty structure. S-ET

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