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CMA Final · Indirect Tax Laws and Practice · GST Refunds - Inverted Duty Structure and Zero Rated Supplies

Under Rule 89(4), for refund of ITC on exports under LUT, Vindhya Exports shipped goods with invoice value Rs 12,00,000. The FOB value in the shipping bill is Rs 11,50,000. Like goods supplied domestically in the same quantity by a similarly placed supplier are valued at Rs 6,00,000. What is the 'turnover of zero-rated supply of goods' for the formula?

The turnover of zero-rated goods is Rs 9,00,000. Exported value is the lower of FOB and invoice value, Rs 11,50,000, and this is compared with 1.5 times the domestic value of like goods, Rs 9,00,000. The rule takes whichever is less, so the cap applies.

  1. ARs 12,00,000
  2. BRs 11,50,000
  3. CRs 9,00,000Correct
  4. DRs 6,00,000

Explanation

The value of exported goods is the lower of the FOB value and the invoice value, i.e. Rs 11,50,000. The rule then takes the lesser of that value and 1.5 times the domestic value of like goods, i.e. 1.5 x 6,00,000 = Rs 9,00,000. The lesser figure is Rs 9,00,000. Rs 11,50,000 ignores the 1.5 times cap.

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