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A Tier-1 integrated pharma active pharmaceutical ingredient plant at Ankleshwar in Gujarat, filing quarterly Section 54(3) refunds against accumulated inverted-duty input tax credit, must apply the Notification 14/2022-Central Tax amended Rule 89(5) formula to every refund application filed on or after 5 July 2022. The amendment codified the exclusion of input services and capital goods from the Net ITC numerator — a position already confirmed by the Supreme Court in Union of India v. VKC Footsteps India Pvt Ltd (2021) 10 SCC 674 — and produces a permanent recurring reduction in refund quantum against pre-amendment claim benchmarks. For a plant with a normal quarterly Net ITC composition of roughly 25 to 35 percent non-goods (input services plus capital goods), the reduction is of the order of Rs 3 to 4 crore per quarter or Rs 12 to 16 crore per year, and the plant's Statement 1A invoice-level annexure to Form GST RFD-01 must disclose the Net ITC composition without the input-services and capital-goods legs even where those legs sit as ordinary ITC in the electronic credit ledger.
Build a per-invoice input classification register that tags every inward supply from GSTR-2B and the plant's own purchase ledger as goods (Net ITC eligible), input services (excluded from Net ITC) or capital goods (excluded from Net ITC), anchored to the vendor invoice HSN chapter and the accounting treatment in the plant's books. Build a Net-ITC composition workbook per tax period per GSTIN that decomposes the eligible-goods leg by HSN chapter — active pharmaceutical ingredient intermediates, key starting materials, packaging, excipients — and holds the input-services and capital-goods legs in separate parallel ledgers that feed the electronic credit ledger but not the Net ITC numerator. Apply the Notification 14/2022 amended Rule 89(5) formula: Maximum Refund = (Turnover of inverted-rated supply × Net ITC / Adjusted Total Turnover) minus (Tax payable on inverted-rated supply × Net ITC / ITC availed on inputs and input services). Generate the Statement 1A annexure line-for-line matched to the composition workbook. File Form GST RFD-01 quarterly. Maintain a pre-versus-post 5 July 2022 refund quantum trend chart for treasury projection and board reporting.
Per-invoice input classification register with three tags — goods, input services, capital goods — anchored to HSN chapter and accounting treatment; Net-ITC composition workbook per plant GSTIN per tax period; input-services ledger held separate (freight, external analytical laboratory, quality-control AMC, engineering consulting, plant maintenance); capital-goods ledger held separate (reactors, granulators, compression machines, packaging lines, HVAC additions); Notification 14/2022 amended Rule 89(5) formula computation; Statement 1A invoice-level annexure builder line-matched to the composition workbook; Form GST RFD-01 electronic filing feed; pre-versus-post 5 July 2022 refund quantum trend chart for permanent-recurring-reduction quantification; treasury projection against RFD-04 provisional refund receipt and RFD-06 final sanction timing; two-year filing window monitor under Section 54.
A quarterly refund pack per plant per GSTIN: input classification register with per-invoice goods-services-capital-goods tagging; Net-ITC composition workbook decomposing the eligible-goods leg by HSN chapter; input-services and capital-goods ledgers held separate and excluded from the Net ITC numerator; Notification 14/2022 amended Rule 89(5) formula computation showing the maximum refund; Statement 1A invoice-level annexure ready for portal submission; Form GST RFD-01 draft filed electronically; pre-versus-post 5 July 2022 refund quantum trend chart quantifying the permanent recurring reduction against legacy benchmark; and a rolling treasury projection matching each filed RFD-01 to expected RFD-04 provisional receipt within seven days and RFD-06 final sanction post scrutiny, sized to the post-amendment refund quantum rather than the pre-amendment claim base.
A Tier-1 integrated pharma active pharmaceutical ingredient (API) unit at Ankleshwar in Gujarat closes its books for Q2 FY 2022-23 — the tax quarter that straddles the CBIC’s most consequential procedural amendment to the inverted-duty refund cycle. On 5 July 2022 the government issued Notification 14/2022-Central Tax, amending sub-rule (5) of Rule 89 of the Central Goods and Services Tax Rules 2017. The amendment applied prospectively: refund applications filed on or after 5 July 2022 use the amended formula in full; applications filed before that date use the pre-amendment version. For an API unit that had built its quarterly Section 54(3) refund workbook against the pre-amendment interpretive base — with input services and capital goods included in the Net ITC numerator — the amendment produced a permanent recurring reduction in refund quantum of the order of Rs 3 to 4 crore per quarter, or Rs 12 to 16 crore per year, that flows directly to the RFD-06 final sanction line. This is the Notification 14/2022-CT Net ITC formula amendment pharma reconciliation — the codification of the Supreme Court’s Union of India v. VKC Footsteps position directly into the rule text, with a 5 July 2022 prospective cutover date that every Indian pharma finance team’s refund cycle now runs against.
Quick reference
| Aspect | Detail |
|---|---|
| Amending notification | Notification 14/2022-Central Tax dated 5 July 2022 |
| Effective date | 5 July 2022 (prospective; applications on or after this date apply the amended formula) |
| Rule amended | Rule 89(5), Central Goods and Services Tax Rules 2017 |
| Governing refund provision | Section 54(3), Central Goods and Services Tax Act 2017 |
| Supreme Court anchor | Union of India v. VKC Footsteps India Pvt Ltd, (2021) 10 SCC 674 (13 September 2021) |
| Amended formula (first limb) | (Turnover of inverted-rated supply × Net ITC) / Adjusted Total Turnover |
| Amended formula (second limb) | (Tax payable on inverted-rated supply × Net ITC) / ITC availed on inputs and input services |
| Net ITC composition (post-amendment) | Goods (input tax credit availed on inputs) only — excludes input services and capital goods |
| Refund filing form | Form GST RFD-01 (electronic on GST portal) |
| Invoice-level annexure | Statement 1A (per Rule 89(2)) |
The reconciliation in one paragraph
Notification 14/2022-Central Tax dated 5 July 2022 amended Rule 89(5) of the CGST Rules 2017 prospectively. Two changes carry the operational impact for a pharma API or formulation plant filing Section 54(3) inverted-duty refunds. First, the definition of Net ITC in the numerator was codified as excluding input services and capital goods — settling in the rule itself the position the Supreme Court had already confirmed on 13 September 2021 in Union of India v. VKC Footsteps India Pvt Ltd (2021) 10 SCC 674. Second, the second limb of the formula — the subtraction term for tax payable on the inverted-rated supply — was rebalanced by applying the ratio of Net ITC over the sum of ITC availed on inputs and input services (rather than a straight tax-payable subtraction). For a Tier-1 API plant with a quarterly Net ITC composition of roughly 60 to 70 percent goods and 25 to 35 percent input services plus capital goods, the amendment strips the non-goods leg from the numerator and produces a permanent recurring reduction in refund quantum of the order of Rs 3 to 4 crore per quarter. The reconciliation discipline the amendment demands is a per-invoice input classification register that separates goods, input services and capital goods at source; a Net-ITC composition workbook per tax period per GSTIN that decomposes the eligible-goods leg by HSN chapter; and a refund quantum trend chart maintained pre-versus-post 5 July 2022 that quantifies the recurring reduction for treasury projection.
What the scenario looks like in India
The Indian pharma API industry runs a distinct manufacturing geography from the Chapter 30 formulation industry documented in the Wave A cornerstone on Rule 89(5) for pharma formulations. Ankleshwar in Gujarat’s chemical belt anchors a large share of national API capacity — the town’s Notified Industrial Area hosts integrated API-plus-intermediate plants that supply both domestic formulation lines and export CDMO contracts. Vapi and Sarigam, also in the Gujarat chemical belt, host adjacent API capacity. The Hyderabad-Bollaram-Bachupally corridor in Telangana anchors R&D-integrated API capacity. Bharuch and Dahej host the largest of the export-oriented API units. Vishakhapatnam in Andhra Pradesh hosts a significant complex-generics API cluster. Kurkumbh in Maharashtra and Verna in Goa complete the primary geography. Each plant sits under a separate state GSTIN, files its own GSTR-1 and GSTR-3B, and — under Section 54(3) read with Rule 89(5) — files its own Form GST RFD-01 refund claim against the accumulated inverted-duty ITC at that plant’s electronic credit ledger.
Illustrative Tier-1 and Tier-2 pharma majors operating multi-plant API networks at the scale relevant to this reconciliation include Sun Pharmaceutical Industries, Dr Reddy’s Laboratories, Lupin, Aurobindo Pharma, Cipla, Zydus Lifesciences, Torrent Pharmaceuticals, Alkem Laboratories, Glenmark Pharmaceuticals, and Cadila Pharmaceuticals — several of which run their API footprint through Ankleshwar and adjacent Gujarat-belt sites feeding their own formulation plants at Ahmedabad, Halol, Baddi or Sikkim. Tier-2 API-focused players — Divi’s Laboratories at Vishakhapatnam and Hyderabad, Neuland Laboratories at Bollaram, Laurus Labs at Vishakhapatnam, Granules India at Bachupally, Suven Life Sciences and Suven Pharma at Bollaram, and Ipca Laboratories with multiple Gujarat-belt sites — run API-heavy footprints where the Rule 89(5) inverted-duty refund cycle is the single largest working-capital line item on the plant balance sheet.
For the reconciliation this article walks through, the reference persona is a Tier-1 pharma API unit at Ankleshwar producing Chapter 29 antibiotics (HSN 2941) and Chapter 30 bulk drug mixtures (HSN 3003) at a quarterly output turnover of the order of Rs 120 to 180 crore, with a normal Net ITC composition of roughly 65 percent goods (active pharmaceutical ingredient intermediates, key starting materials, packaging, excipients), 20 percent input services (clinical research consultancy, quality-control laboratory annual maintenance contracts, logistics services, external analytical testing, engineering consulting) and 15 percent capital goods (equipment amortisation via cross-quarter ITC availment on new plant additions). The plant’s Q2 FY 2022-23 tax quarter straddles the 5 July 2022 notification cutover — the July and August 2022 tax periods sit under the amended formula, the June 2022 tax period application (filed post-5 July) also sits under the amended formula, and the pre-July 2022 tax period applications already in the scrutiny queue continue to run under the pre-amendment formula until final sanction.
The regulatory overlay — Section 54(3), Rule 89(5) pre and post 5 July 2022, and VKC Footsteps
Section 54(3) of the Central Goods and Services Tax Act 2017 permits a registered person to claim refund of unutilised input tax credit where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies — the inverted duty structure. The first proviso to Section 54(3) empowers the government to notify supplies against which refund of unutilised ITC shall not be allowed (the mechanism later invoked by Notification 09/2022-Central Tax (Rate) to bar refund on HSN Chapter 15 and Chapter 27 output supplies — see the sibling article on Notification 09/2022 Chapter 27 solvents blocked refund and the cross-cluster edible oil Chapter 15 IDR refund blocked walkthrough for the direct-output-block mechanic).
Rule 89(5) of the CGST Rules 2017 gives the operational refund formula. The pre-amendment version, in force from 1 July 2017 to 4 July 2022, computed maximum refund as (Turnover of inverted-rated supply × Net ITC / Adjusted Total Turnover) minus the tax payable on such inverted-rated supply. The definition of Net ITC in the pre-amendment rule text was ambiguous enough that a split emerged at the High Court level: the Gujarat High Court in the VKC Footsteps writ read down the rule to allow input services in the Net ITC numerator, on the reasoning that Section 54(3) itself refers to unutilised input tax credit without confining it to inputs; the Madras High Court in Tvl. Transtonnelstroy Afcons Joint Venture upheld the rule as written, holding that the refund is confined to unutilised credit on inputs and does not extend to input services or capital goods.
The Supreme Court in Union of India v. VKC Footsteps India Pvt Ltd, (2021) 10 SCC 674, delivered on 13 September 2021, resolved the split in favour of the Madras view. The court upheld the constitutional validity of Section 54(3) read with Rule 89(5), confirmed that the refund is confined to unutilised credit on inputs, and held that input services and capital goods are excluded from the Net ITC base. The judgment did not, however, direct the CBIC to re-open past sanctioned refunds or to amend the rule text; it simply confirmed constitutional validity and left the interpretive space open for further clarification.
Notification 14/2022-Central Tax dated 5 July 2022 is the CBIC’s step to codify the Supreme Court’s confirmation directly into the rule itself, removing all residual interpretive space. The amended formula reads: Maximum Refund Amount = (Turnover of inverted-rated supply of goods and services × Net ITC / Adjusted Total Turnover) minus (Tax payable on such inverted-rated supply × Net ITC / ITC availed on inputs and input services). Net ITC in the numerator is now expressly defined as the input tax credit availed on inputs during the relevant period — excluding input services and capital goods. The second-limb rebalancing (dividing the tax-payable term by the sum of ITC availed on inputs and input services, rather than a straight tax-payable subtraction) additionally tightens the maximum refund for taxpayers with a heavy internal input-services ITC share.
The amendment is prospective. Refund applications filed on or after 5 July 2022 use the amended formula in full; applications filed before that date use the pre-amendment version. Pharma finance teams with legacy pre-amendment refund applications still in the scrutiny queue should assess each application individually — the Supreme Court’s VKC Footsteps position of 13 September 2021 applies on merits to pre-amendment applications filed after that date but before 5 July 2022, even without the rule amendment, so a proper officer scrutinising such an application will apply the exclusion of input services and capital goods regardless of the pre-amendment rule text. The pre-versus-post 5 July 2022 delta the persona describes is real only for applications that had reached final sanction (or that continue to sit under the pre-amendment formula on the interpretive basis they were filed with) before the amended rule took effect.
A worked example — an illustrative pre-versus-post quarterly refund comparison
Illustrative — the following figures represent the operating pattern of a Tier-1 pharma API unit at Ankleshwar at the scale that Indian large-cap listed API players operate. Public disclosures do not reveal per-plant per-quarter inverted-duty refund quantum in the granularity below; cross-verify against your own plant’s GSTR-1 and GSTR-2B extracts before action.
The reference persona API unit at Ankleshwar closes Q2 FY 2022-23 (July-September 2022) with the following aggregate quarterly outward and inward supply position, converted to Rs crore for the tax quarter:
| Reconciliation line | HSN chapter | Value (Rs crore) | Rate | GST (Rs crore) |
|---|---|---|---|---|
| Output — Chapter 29 antibiotics (API) | 2941 | 96.0 | 5 percent | 4.80 |
| Output — Chapter 30 bulk drug mixtures | 3003 | 54.0 | 5 percent | 2.70 |
| Aggregate outward supply | 150.0 | 7.50 | ||
| Input — key starting materials and API intermediates | 2924, 2933, 2935 | 68.0 | 12 to 18 percent | 10.20 |
| Input — packaging (drums, bags, HDPE containers) | 3920, 3923, 4819 | 14.0 | 18 percent | 2.52 |
| Input — excipients and process aids | 1108, 3823, 3505 | 8.0 | 5 to 12 percent | 0.72 |
| Aggregate eligible-goods ITC (post-amendment Net ITC base) | 90.0 | 8.70 | ||
| Input service — clinical research consultancy | 6.5 | 18 percent | 1.17 | |
| Input service — quality-control laboratory AMC | 4.0 | 18 percent | 0.72 | |
| Input service — logistics services (outbound to formulation plants) | 2.5 | 18 percent | 0.45 | |
| Aggregate input-services ITC (pre-amendment: included in Net ITC; post-amendment: EXCLUDED) | 13.0 | 2.34 | ||
| Capital goods — reactor and pilot-scale equipment additions | 7.5 | 18 percent | 1.35 | |
| Aggregate capital-goods ITC (pre-amendment: included via cross-quarter reclassification; post-amendment: EXCLUDED) | 7.5 | 1.35 |
Under the pre-amendment interpretive base — for a refund application that had been filed under the Gujarat High Court’s VKC Footsteps reading before the Supreme Court reversal — Net ITC in the numerator was Rs 8.70 (goods) + Rs 2.34 (input services) + Rs 1.35 (capital goods amortisation credit) = Rs 12.39 crore. Applying the pre-amendment first limb: (150.0 × 12.39 / 150.0) = Rs 12.39 crore. Straight tax-payable subtraction: Rs 12.39 − Rs 7.50 = Rs 4.89 crore maximum refund for the quarter under the pre-amendment base.
Under the post-amendment formula — for a refund application filed on or after 5 July 2022 — Net ITC in the numerator is Rs 8.70 crore (eligible-goods only; input services and capital goods excluded). Applying the amended first limb: (150.0 × 8.70 / 150.0) = Rs 8.70 crore. Applying the rebalanced amended second limb: (7.50 × 8.70 / (8.70 + 2.34)) = (7.50 × 8.70 / 11.04) = Rs 5.91 crore. Post-amendment maximum refund = 8.70 − 5.91 = Rs 2.79 crore for the quarter under the amended base. Adjusting the second-limb impact separately from the Net-ITC-numerator impact, the illustrative comparison narrows to an approximate Rs 8.7 crore Net ITC pool (post) versus Rs 12.4 crore Net ITC pool (pre) — a Rs 3.7 crore per quarter permanent recurring reduction in the underlying Net ITC base, before the second-limb rebalancing. Annualised at Rs 14 to 16 crore per plant per year, this is the working-capital delta that the plant’s treasury projection must be recalibrated against.
Common reconciliation breakages
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Input-services ITC bleed into the Net ITC numerator. The most common cause of a partial refund rejection post-5 July 2022 is inclusion of input-services ITC — clinical research consultancy, quality-control laboratory AMC, freight, external analytical testing, engineering consulting — in the Net ITC base. The exclusion was codified in the Notification 14/2022 amendment and settled at the Supreme Court in VKC Footsteps. Plants that treat the entire GSTR-2B ITC pool as Net ITC without separating input-service line items produce an over-stated refund claim that the proper officer rejects with a Form GST RFD-03 deficiency memo. Reconciliation discipline: the input-services ledger must be extracted from GSTR-2B at source and held in a separate accounting bucket, with the Net ITC formula drawing only from the goods-input register — see also the GSTR-2B ITC reconciliation failure modes reference for the upstream reconciliation surface.
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Capital-goods cross-quarter reclassification into Net ITC. A specific pre-amendment interpretive path had some plants reclassifying capital-goods ITC (typically 60-month amortisation on plant and equipment additions) into a periodic quarterly Net ITC contribution, on the reading that the amortised portion represented ITC availed in the relevant tax period. The Notification 14/2022 amendment closes this path entirely — capital-goods ITC in any form is excluded from Net ITC. Plants that continue to feed a cross-quarter capital-goods reclassification into the numerator produce a rejection at scrutiny and a partial reversal against the electronic credit ledger.
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Application-date-versus-tax-period mismatch on straddle claims. The 5 July 2022 cutover is anchored to the application filing date, not to the tax period being claimed. A refund for the June 2022 tax period filed on 10 July 2022 sits under the amended formula, even though the underlying tax period is pre-amendment. A refund for the same tax period filed on 30 June 2022 sits under the pre-amendment formula. Plants with a June 2022 tax period claim in the scrutiny queue must know which formula their proper officer will apply, and recalibrate the Statement 1A composition accordingly.
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Statement 1A composition drift against Net ITC workbook. The Statement 1A invoice-level annexure to Form GST RFD-01 must line-match the Net ITC composition workbook that feeds the formula computation. Plants that generate the Statement 1A from the raw GSTR-2B pool (including input-service and capital-goods invoices) but then submit a formula computation using only the goods-input Net ITC produce a mismatch between the annexure and the claim value — the proper officer will surface this at scrutiny and issue a deficiency memo. The reconciliation discipline: Statement 1A is generated from the same eligible-goods input register that feeds the Net ITC numerator, and both draw from the same input classification register at source.
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Pre-versus-post refund quantum treasury projection benchmark drift. Finance teams that continue to project the treasury working-capital cycle against a pre-amendment refund quantum benchmark — because the plant’s historical filing pattern generated Rs 12 to 14 crore per quarter under the pre-amendment interpretive base — will discover a permanent recurring Rs 3 to 4 crore per quarter cash-flow gap once the amended formula takes hold. The reconciliation discipline: the refund quantum trend chart is maintained pre-versus-post 5 July 2022 explicitly, and the treasury projection is rebased to the post-amendment quantum for all cycles from Q2 FY 2022-23 forward.
How a reconciliation platform handles this
A purpose-built pharma reconciliation platform ingests the plant-level GSTR-1 outward supply register, the GSTR-2B auto-populated ITC statement, and the plant’s own purchase and asset ledgers — and produces a per-invoice input classification register that separates goods, input services and capital goods at source. The platform builds the Net-ITC composition workbook per tax period per GSTIN with the eligible-goods leg decomposed by HSN chapter, holds the input-services and capital-goods ledgers in parallel (feeding the electronic credit ledger but not the Net ITC numerator), applies the Notification 14/2022 amended Rule 89(5) formula, generates the Statement 1A invoice-level annexure line-matched to the composition workbook, and drafts the Form GST RFD-01 filing base for portal submission. The refund quantum trend chart is maintained pre-versus-post 5 July 2022 for the finance team’s treasury projection and board reporting. Match rate improvement of 51 to 88 percent on the plant-level GSTR-2B to accounting ITC reconciliation, combined with an ISO 27001:2022 posture and DPDP Act 2023 aligned data handling, is what makes the platform an infrastructure investment for a Tier-1 pharma API operator running quarterly Section 54(3) refunds at the scale where the Notification 14/2022 amendment delta compounds into Rs 12 to 16 crore per plant per year — rather than a spreadsheet substitute.
For the operating cycle context in which this reconciliation sits, read the Wave A Rule 89(5) for pharma formulations complete guide, the Wave B sibling on Section 54(3) CGST and Form GST RFD-01 pharma inverted-duty filing workflow, and the cross-cluster dairy inverted-duty refund under Rule 89(5) post GST 2.0 walkthrough where the same Rule 89(5) mechanic runs against a different HSN chapter profile. The methodology framework for building the per-invoice input classification register and the Net-ITC composition workbook sits in Terra Insight’s own reconciliation failure mode analysis pillar and the reconciliation playbook for monthly close operations pillar. The commercial pillar for the pharma sub-cluster is Pharma reconciliation software India; the broader authority for the platform is reconciliation software India with the specialised GST reconciliation software surface for the Section 54(3) refund workflow.
The five FAQs below address the operational questions Indian pharma indirect-tax leads and API-plant controllers ask most often when reconciling their standing refund cycle against the Notification 14/2022 amended formula.
Content authored by practitioners with experience at Amazon India, Intuit QuickBooks, and the Tata Group. Meet the team →
- ▸ Notification 14/2022-Central Tax dated 5 July 2022 — The Central Government, on the recommendation of the GST Council, amended sub-rule (5) of Rule 89 of the Central Goods and Services Tax Rules 2017. The amended formula for maximum refund under the inverted duty structure reads: Maximum Refund Amount = (Turnover of inverted-rated supply of goods and services × Net ITC / Adjusted Total Turnover) minus (Tax payable on such inverted-rated supply × Net ITC / ITC availed on inputs and input services). Net ITC means the input tax credit availed on inputs during the relevant period other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both. The amendment applies prospectively — refund applications filed on or after 5 July 2022 use the amended formula.
- ▸ Section 54(3), Central Goods and Services Tax Act 2017 — Refund of unutilised input tax credit. A registered person may claim refund of any unutilised input tax credit at the end of any tax period, subject to the conditions that no refund of unutilised ITC shall be allowed in cases other than zero-rated supplies made without payment of tax and where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies — the inverted duty structure. The first proviso empowers the government to notify supplies against which refund of unutilised ITC shall not be allowed.
- ▸ Union of India v. VKC Footsteps India Pvt Ltd, (2021) 10 SCC 674 (Supreme Court of India, 13 September 2021) — The Supreme Court upheld the constitutional validity of Section 54(3) read with Rule 89(5) and confirmed that the statutory refund of unutilised input tax credit in the inverted duty structure is confined to unutilised credit on inputs — input services and capital goods are excluded from the Net ITC base. The judgment resolved the split between the Gujarat High Court in VKC Footsteps (which had read down the rule to include input services) and the Madras High Court in Tvl. Transtonnelstroy Afcons Joint Venture (which had upheld the exclusion). The Supreme Court's confirmation of the Madras view is the constitutional-validity anchor that Notification 14/2022 subsequently codified into the rule text.
- ▸ Rule 89(5) as it stood prior to 5 July 2022 (pre-amendment version) — The pre-amendment formula computed maximum refund as (Turnover of inverted-rated supply × Net ITC / Adjusted Total Turnover) minus the tax payable on such inverted-rated supply. The definition of Net ITC in the pre-amendment rule and the interpretive path taken by certain High Courts (notably the Gujarat High Court in VKC Footsteps) had allowed some registered persons to include input services in the Net ITC numerator, producing a higher refund quantum. Applications filed under the pre-amendment rule that had reached final sanction before the Supreme Court judgment on 13 September 2021 were not reopened; applications filed on or after 5 July 2022 apply the amended formula in full.
- ▸ Form GST RFD-01 and Rule 89(2) Statement 1A — invoice-level annexure to the inverted-duty refund claim — The refund application under Section 54(3) is filed electronically in Form GST RFD-01, accompanied by Statement 1A — the invoice-level annexure supporting the Net ITC composition. The statement discloses each inward supply invoice contributing to the Net ITC pool with the vendor GSTIN, invoice number, invoice date, HSN classification, taxable value, and tax paid. Post-Notification 14/2022, Statement 1A must exclude input service invoices and capital goods invoices from the Net ITC composition even where they sit as ordinary ITC in the plant's electronic credit ledger.