Circular No.
18/18/2017-GST
F. No. 354/320/2017-TRU-Pt.l
North Block, New
Delhi
To,
The Principal
Chief Commissioners/Chief Commissioners/ Principal Commissioners/
Commissioner of Central Tax (All) /
Madam/Sir,
Subject:
Clarification on refund of unutilized input tax credit of GST paid on inputs
in respect of exporters of fabrics - regarding.
Doubts have been raised regarding the restrictions of refund of
unutilized input tax credit of GST paid on inputs to manufacturer exporters
of fabrics [falling under chapters 50 to 55 and 60 and headings 5608, 5801,
5806] under GST.
2.1
The matter has been examined. In this
context, sub-section 3 of section 54 of the CGST Act, 2017 provides as under:
"(3) Subject to the provisions of sub-section
(10), a registered person may claim refund of any unutilised input tax
credit at the end of any tax period:
Provided that no refund of unutilised input tax credit shall be allowed
in cases other than—
(i)
zero rated supplies made without
payment of tax;
(ii) where the credit has accumulated on
account of rate of tax on inputs being
higher than the rate of tax on output supplies (other than nil rated or
fully
2.2 Based on the recommendations of
the GST Council, Notification No. 5/2017-Central Tax(Rate) dated 28.06.2017
[as amended from time to time] has been issued under clause (ii) of the
proviso to sub-section (3) of section 54 of the CGST Act, 2017 restricting
refund of unutilised input tax credit of GST paid on inputs in respect of
certain specified goods, including input tax credit of GST paid on inputs.
2.3
However, the aforesaid
notification having been issued under clause (ii) of the proviso to
sub-section (3) of section 54 of the CGST Act, 2017, restriction on refund
of unutilised input tax credit of GST paid on inputs will not be applicable
to zero rated supplies, that is (b) supply of goods or services or both
to a Special Economic Zone developer or a Special Economic Zone unit.
2.4 Accordingly, as
regards export of fabrics it is clarified that, subject to the provisions of
sub-section (10) of the section 54 of the CGST Act, 2017, a manufacturer of such
fabrics will be eligible for refund of unutilized input tax credit of GST paid
on inputs [other than the input tax credit of GST paid on capital goods] in
respect of fabrics manufactured and exported by him.
3. Difficulty, if any, in the implementation of
this circular should be brought to the notice of the Board.
Yours faithfully
Rahil Gupta
Government of India
Ministry of Finance
Department of
Revenue
Tax research Unit
****
16th November 2017
The Principal Director Generals/
Director Generals (All)
exempt supplies), except supplies of goods or services or both as may be
notified by the Government on the recommendations of the Council.
(a) exports of goods or services or both; or
Technical Officer
(TRU)