2025-VIL-1340-KAR
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SGST High Court Cases

GST - Refund of unutilized Input Tax Credit under inverted duty – Petitioner is engaged in the business of procuring and packing various edible oils on which they pay tax at 5%. The petitioner accumulated ITC as the rate of tax on certain inputs was higher than the rate of tax charged on the packed edible oil (the output supply), and sought refund of the accumulated and unutilized ITC - Whether the petitioner would be entitled to refund of accumulated ITC under Section 54(3)(ii) of the CGST Act, where the input and output supplies are the same, i.e. edible oil, even though they attract different tax rates - HELD - The Section 54(3)(ii) of the CGST Act does not proscribe or forbid the grant of refund where the input and the output are the same. Clause (ii) of the proviso to sub-section (3) of Section 54 does not contemplate comparing the rate of tax on the principal input with the rate of tax chargeable on the principal output supply. There is neither any reason nor any scope to further confine the refund of unutilized ITC only to cases where the rate on the main input is higher than the rate of tax on the principal output - The legislative intent behind the grant of refund of unutilized ITC that has accumulated on account of inverted tax structure is to confine the tax to the tax on the output supplies at the rate so fixed. Therefore, the Revenue's contention that the petitioner is not entitled to refund of unutilized ITC as the rate of bulk edible oil (input) and packed edible oil (output) is the same, is unsustainable - The impugned orders rejecting the refund claim of the petitioner is set aside. The respondent is directed to refund the amount due to the petitioner along with applicable interest – The writ petition is allowed
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