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Circular No. 18/1 8 /2017-GST
F. No. 354/320/2017-TRU-PtL
Government
of India
Ministry of Finance
Department
of Revenue
Tax research Unit
RR
North Block, New Delhi
16 November 2017
To,
The Principal
Chief Commissioners/Chief
Commissioners/
Principal
Commissioners/
Commissioner
of Central Tax (All) /
The Principal Director Generals/ Director Generals (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.
2A The matter has been examined.
In this context, subsection
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
exempt supplies), except supplies of goods or services or both as may be
notified by the Government
on the recommendations
of the Council.
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

Circular No. 18/18 /2017-GST
supplies, that is (a) exports of goods or services or both; or (b) supply of goods or services
or both to a Special Economic Zone developer ot 4 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.
3s Difficulty,
if any, in the implementation
of this circular should be brought to the
notice of the Board.
Yours faithfully


Rahil Gupta
Technical
Officer (TRU)
circulars no 18 1 8 2017 gst | iKargos