Under the inverted duty structure, the rate of tax on inputs is higher than the rate of tax on output supplies. As per section 54(3) of the CGST Act, 2017, a registered person may claim refund of any unutilised input tax credit at the end of any tax period where the credit has accumulated on account of inverted rate structure (other than nil rated or fully exempted supplies). However, the Government on the recommendation of the Council may notify supplies of goods or services or both in respect of which refund of accumulated input tax credit is not available though such supplies are falling under the inverted duty structure. Accordingly, via Notification No 5/2017- Central Tax (Rate), the Government notified the goods 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 goods (other than nil rated or fully exempted supplies).
List of goods on which refund of accumulated input tax credit is not available
| S. No. | Tariff item, heading, sub- heading or Chapter | Description of Goods |
| 1A | 1507 | Soya-bean oil and its fractions, whether or not refined, but not chemically modified |
| 1B | 1508 | Ground-nut oil and its fractions, whether or not refined, but not chemically modified |
| 1C | 1509 | Olive oil and its fractions, whether or not refined, but not chemically modified |
| 1D | 1510 | Other oils and their fractions, obtained solely from olives, whether or not refined, but not chemically modified, including blends of these oils or fractions with oils or fractions of heading 1509 |
| 1E | 1511 | Palm oil and its fractions, whether or not refined, but not chemically modified |
| 1F | 1512 | Sunflower-seed, safflower or cotton-seed oil and fractions thereof, whether or not refined, but not chemically modified |
| 1G | 1513 | Coconut (copra), palm kernel or babassu oil and fractions thereof, whether or not refined, but not chemically modified |
| 1H | 1514 | Rape, colza or mustard oil and fractions thereof, whether or not refined, but not chemically modified |
| 1I | 1515 | Other fixed vegetable or microbial fats and oils (including jojoba oil) and their fractions, whether or not refined, but not chemically |
| 1J | 1516 | Vegetable fats and oils and their fractions, partly or wholly hydrogenated, interesterified, re-esterified or elaidinised, whether or not refined, but not further prepared |
| 1K | 1517 | Edible mixtures or preparations of vegetable fats or vegetable oils or of fractions of different vegetable fats or vegetable oils of this Chapter, other than edible fats or oils or their fractions of heading 1516 |
| 1L | 1518 | Vegetable fats and oils and their fractions, boiled, oxidised, dehydrated, sulphurised, blown, polymerised by heat in vacuum or in inert gas or otherwise chemically modified, excluding those of heading 1516 |
| 1M | 2701 | Coal; briquettes, ovoids and similar solid fuels manufactured from coal |
| 1N | 2702 | Lignite, whether or not agglomerated, excluding jet |
| 1O | 2703 | Peat (including peat litter), whether or not agglomerated |
| 1AA | 5007 | Woven fabrics of silk or of silk waste |
| 2 | 5111 to 5113 | Woven fabrics of wool or of animal hair |
| 3 | 5208 to 5212 | Woven fabrics of cotton |
| 4 | 5309 to 5311 | Woven fabrics of other vegetable textile fibres, paper yarn |
| 5 | 5407, 5408 | Woven fabrics of manmade textile materials |
| 6 | 5512 to 5516 | Woven fabrics of manmade staple fibres |
| 6A | 5608 | Knotted netting of twine, cordage or rope; made up fishing nets and other made up nets, of textile materials |
| 6B | 5801 | Corduroy fabrics |
| 6C | 5806 | Narrow woven fabrics, other than goods of heading 5807; narrow fabrics consisting of warp without weft assembled by means of an adhesive (bolducs) |
| 7 | 60 | Knitted or crocheted fabrics [All goods] |
| 8 | 8601 | Rail locomotives powered from an external source of electricity or by electric accumulators |
| 9 | 8602 | Other rail locomotives; locomotive tenders; such as Diesel electric locomotives, Steam locomotives and tenders thereof |
| 10 | 8603 | Self-propelled railway or tramway coaches, vans and trucks, other than those of heading 8604 |
| 11 | 8604 | Railway or tramway maintenance or service vehicles, whether or not self-propelled (for example, workshops, cranes, ballast tampers, trackliners, testing coaches and track inspection vehicles) |
| 12 | 8605 | Railway or tramway passenger coaches, not self-propelled; luggage vans, post office coaches and other special purpose railway or tramway coaches, not self-propelled (excluding those of heading 8604) |
| 13 | 8606 | Railway or tramway goods vans and wagons, not self-propelled |
| 14 | 8607 | Parts of railway or tramway locomotives or rolling-stock; such as Bogies, bissel-bogies, axles and wheels, and parts thereof |
| 15 | 8608 | Railway or tramway track fixtures and fittings; mechanical (including electro-mechanical) signalling, safety or traffic control equipment for railways, tramways, roads, inland waterways, parking facilities, port installations or airfields; parts of the foregoing |
Note:
1. Nothing contained in the Notification No 5/2017- Central Tax (Rate) shall apply to the input tax credit accumulated on supplies received on or after the 1st day of August, 2018, in respect of goods mentioned at serial numbers 1AA, 2, 3, 4, 5, 6, 6A, 6B, 6C and 7 of the above Table.
2. In respect of said goods, the accumulated input tax credit lying unutilised in balance, after payment of tax for and upto the month of July, 2018, on the inward supplies received up to the 31st day of July 2018, shall lapse.