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Circular No. 181/13/2022-GST

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F. No. CBIC-20021/4/2022
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing

New Delhi, Dated the 10
th
November, 2022
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/
Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)

Madam/Sir,

Subject: Clarification on refund related issues-reg.

Attention is invited to sub-section (3) of section 54 of CGST Act, 2017, which
provides for the refund of unutilized input tax credit in cases where credit is accumulated on
account of rate of tax of inputs being higher than the rate of tax on output supplies i.e. on
account of inverted duty structure. Sub-rule (5) of rule 89 of CGST Rules, 2017 prescribes
the formula for grant of refund in cases of inverted duty structure. Vide Notification No.
14/2022-Central Tax dated 05.07.2022, amendment has been made in the formula prescribed
under sub-rule (5) of rule 89 of the CGST Rules, 2017. Further, vide Notification No.
09/2022-Central Tax (Rate) dated 13.07.2022, which has been made effective from
18.07.2022, the restriction has been placed on refund of unutilised input tax credit on account
of inverted duty structure in case of supply of certain goods falling under chapter 15 and 27.

2. Representations have been received from the trade and the field formations seeking
clarification on various issues pertaining to the implementation of the above notifications. In
order to clarify the issues and to ensure uniformity in the implementation of the provisions of
law across the field formations, the Board, in exercise of its powers conferred by section 168
(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”),
hereby clarifies the issues as under:

S. No. Issue Clarification
1. Whether the formula prescribed
under sub-rule (5) of rule 89 of the
CGST Rules, 2017 for calculation of
refund of unutilised input tax credit
on account of inverted duty structure,
as amended vide Notification No.
14/2022-Central Tax dated
05.07.2022, will apply only to the
refund applications filed on or after
Vide Notification No. 14/2022-Central Tax
dated 05.07.2022, amendment has been
made in sub-rule (5) of rule 89 of CGST
Rules, 2017, modifying the formula
prescribed therein. The said amendment is
not clarificatory in nature and is applicable
prospectively with effect from 05.07.2022.
Accordingly, it is clarified that the said
amended formula under sub-rule (5) of rule

Circular No. 181/13/2022-GST

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05.07.2022, or whether the same will
also apply in respect of the refund
applications filed before 05.07.2022
and pending with the proper officer
as on 05.07.2022?
89 of the CGST Rules, 2017 for calculation
of refund of input tax credit on account of
inverted duty structure would be applicable
in respect of refund applications filed on or
after 05.07.2022. The refund applications
filed before 05.07.2022 will be dealt as per
the formula as it existed before the
amendment made vide Notification No.
14/2022-Central Tax dated 05.07.2022.

2. Whether the restriction placed on
refund of unutilised input tax credit
on account of inverted duty structure
in case of certain goods falling under
chapter 15 and 27 vide Notification
No. 09/2022-Central Tax (Rate)
dated 13.07.2022, which has been
made effective from 18.07.2022,
would apply to the refund
applications pending as on
18.07.2022 also or whether the same
will apply only to the refund
applications filed on or after
18.07.2022 or whether the same will
be applicable only to refunds
pertaining to prospective tax
periods?
Vide Notification No. 09/2022-Central Tax
(Rate) dated 13.07.2022, under the powers
conferred by clause (ii) of the first proviso
to sub-section (3) of section 54 of the
CGST Act, 2017, certain goods falling
under chapter 15 and 27 have been specified
in respect of which no refund of
unutilised input tax credit shall be allowed,
where the credit has accumulated on
account of rate of tax on inputs being higher
than the rate of tax on the output supplies of
such specified goods (other than nil rated or
fully exempt supplies). The said notification
has come into force with effect from
18.07.2022.

The restriction imposed vide Notification
No. 09/2022-Central Tax (Rate) dated
13.07.2022 on refund of unutilised input tax
credit on account of inverted duty structure
in case of specified goods falling under
chapter 15 and 27 would apply
prospectively only. Accordingly, it is
clarified that the restriction imposed by the
said notification would be applicable in
respect of all refund applications filed on or
after 18.07.2022, and would not apply to the
refund applications filed before 18.07.2022.

3. It is requested that suitable trade notices may be issued to publicize the contents of
this Circular.

4. Difficulty, if any, in implementation of this Circular may please be brought to the
notice of the Board. Hindi version would follow.

(Sanjay Mangal)
Principal Commissioner (GST)