Refund of ITC on exports – Computation of ‘Net ITC’ under Rule 89(4) – Credit pertaining to earlier period but reversed during relevant period not to be deducted from credit availed

The GSTAT Ranchi Bench has held that the expression ‘input tax credit availed’ under Rule 89(4)(B) of the CGST Rules, particularly for determining ‘Net ITC’ for refund of accumulated credit under Section 54(3) of the CGST Act, has to be understood with reference to the credit actually availed and attributable to the relevant refund period. Department’s submission that ITC reversed need to be deducted from ITC availed for computation of Net ITC during the relevant period, was thus rejected. The Tribunal in Pramod Chandan Surin v. Shivam Iron & Steel Co. Ltd. observed the following:

• Credit reversed pertained to credit availed during the earlier tax period and had never been considered in the refund period in question.

• In GST regime, all the documents are available in the portal and there is no need to produce any evidence to claim refund.

• Paragraph 43(c) of Circular no. 125/44/2019/GST dated 8 November 2019 does not lay down that every reversal made during the relevant refund period must necessarily be treated as a reduction of the ITC availed during that very period, irrespective of the period to which the underlying credit relates.

  • Such an interpretation would effectively add words to Rule 89(4).

  • Clarification in the Circular would not prevail over the statutory prescription.

• Conditions of Section 54(3) and Rule 89(4) were being complied with.