Supreme Court Explains the Excess Input VAT Refund Scheme under New GST Law

Abstract

In line with the neutrality principle, India’s new GST law provides for refund of excess input VAT when input supplies are taxed at a higher rate than output supplies. However, the refund is available only where input goods suffer higher tax and no refund is available for higher tax on input services. Taxable persons challenged this discrimination between input goods and input services. Recently, the Supreme Court of India has rejected this challenge. In this article, the author explains the Supreme Court’s decision and its far-reaching implications for taxable persons.