One of my client is in tea packaging and sale business. The GST on machinery is 18% or 28% and plastic bags have 18%. On sale side the tea have GST of 5%. Now ITC has been accumulated in the credit ledger. Am I eligible to apply for refund under Inverted Tax Structure?

Reply—As per section 54(3) of CGST Act, 2017, A registered person can claim a refund of unutilized ITC on account of Inverted duty structure at the end of any tax period where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. 

If taxpayer has paid 18% GST on inputs (plastic bags) and charging 5% on outward supply of goods, it will be considered as Inverted duty structure and refund can be claimed.

However refund of tax paid on input services and capital goods is not available under inverted duty structure.