As per explanation 3 of section 54 of the CGST Act, A registered person may claim a refund of unutilised Input
Tax Credit (ITC). The ITC on account of inverted tax structure can be claimed at the end of any tax period
where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on
output supplies. A tax period is a period for which a return is required to be furnished.
Exceptions where the refund of the unutilised input tax credit cannot be claimed, are as follows:
- Output supplies are nil-rated or fully exempt supplies except for supplies of goods or services or both as may be notified by the Government on the recommendations of the GST Council.
- If the goods exported out of India are subject to export duty.
- If supplier claims refund of output tax paid under IGST Act.
- If the supplier avails duty drawback or refund of IGST on such supplies.