Bhagwan Manufacturers & Exporters Company (BMEC) is registered under GST in the State of Rajasthan and supplies various goods in domestic as…

CA Final · Indirect Tax Laws · PYQS · May 2024
Bhagwan Manufacturers & Exporters Company (BMEC) is registered under GST in the State of Rajasthan and supplies various goods in domestic as well as in international markets. It is engaged in both manufacturing and trading of goods. It exports goods without payment of tax under bond or letter of undertaking in accordance with the provisions of section 16(3) of the IGST Act, 2017. BMEC provides the following information in relation to various supplies made by it during October, 2023 tax period: S. No Particulars (₹) 1. Taxable value of goods 'Star' supplied within India 14,00,000/- 2. Taxable value of goods 'Sun' exported without payment of tax under letter of undertaking. (However, taxable value of such goods when supplied domestically by BMEC in similar quantities is 6,00,000). 10,00,000/- 3. Taxable value of goods 'Moon' exported without payment of tax under bond. (However, taxable value of such goods when supplied domestically by BMEC in similar quantities is 1,50,000) 2,00,000/- The input tax credit (ITC) availed for the above tax period is as follows: S.No. Particulars (₹) 1 Input tax credit availed on capital goods 1,00,000/- 2 Input tax credit availed on inputs 3,00,000/- 3 Input tax credit availed on inputs services 1,50,000/- BMEC also provided following additional information: (i) All the above inputs, input services and capital goods are used in manufacturing process and all the conditions for availing input tax credit have been complied with. (ii) The balance in the electronic credit ledger of BMEC at the time of filing the refund application is 1,50,000/-. (iii) The balance in the electronic credit ledger of BMEC at the end of the October 2023 tax period for which the refund claim is being filed after GSTR-3B for the said period has been filed is 3,25,000/- You are required to compute the amount refundable to Bhagwan Manufacturers & Exporters Company against accumulated unutilized input tax credit for October 2023 tax period according to the provisions of GST law by giving necessary explanations for treatment of various items.

Suggested Answer and Working Notes:

(a) As per rule 89 (4) of the CGST Rules, 2017, in the given case, refund of ITC in the case of zero-rated supply of goods without payment of tax under bond/LUT is as follows: Refund Amount = (Turnover of zero-rated supply of goods / Adjusted Total Turnover) X Net ITC on inputs and input services = ([9,00,000* + 2,00,000**] / [9,00,000 + 2,00,000 + 14,00,000]) X [1,50,000+3,00,000 3 ] = 1,98,000 *Turnover of goods 'Sun' = Lower of (i) 6,00,000 × 1.5 or (ii) 10,00,000, i.e.9,00,000 **Turnover of goods 'Moon' = Lower of (i) 1,50,000 × 1.5 or (ii) 2,00,000, i.e.2,00,000 Refundable amount is the least of the following: (a) Refund as per rule 89 (4) of the CGST Rules, 2017 [₹ 1,98,000] (b) Balance in ECL at the time of filing refund application, [₹ 1,50,000] and (c) Balance in ECL at the end of October 2023 for which refund is being filed after the return in Form GSTR-3B for the said period has been filed [₹ 3,25,000] Thus, the refundable amount is 1,50,000. ITC is on capital goods is not eligible for refund.

Topics: Refunds

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