2026-VIL-101-GSTAT-KOL
  1. Home
  2. 2026-VIL-101-GSTAT-KOL

SGST Tribunal

GST - Refund of ITC under inverted tax structure - Section 54(3)(ii) of CGST Act - Input and output supplies different goods – Respondent-assessee engaged in manufacturing Agarbati procured raw materials including perfumes, fragrances, chemicals and packaging materials at GST rates ranging from 12% to 18% whereas Agarbati manufactured by taxpayer was supplied at 5% GST, resulting in accumulation of ITC – Revenue aggrieved by refund sanction order whereunder inverted duty refund was allowed in favour of the respondent - Whether refund of accumulated ITC claimed on account of inverted tax structure, where rate of tax on inputs was higher than on output supplies, was admissible under Section 54(3)(ii); and whether the CBIC circular's clarification regarding same goods applied – HELD – Section 54(3)(ii) provides that refund of unutilised ITC shall be allowed where credit has accumulated on account of rate of tax on inputs being higher than rate of tax on output supplies. In the present case, inputs (perfumes, fragrances, chemicals, packaging materials) and output (Agarbati) are commercially distinct and distinguishable goods. Inputs are defined in Section 2(59) as any goods used for or intended to be used in furtherance of business. The taxpayer's inputs fall squarely within this definition - Paragraph 3.2 of CBIC Circular No.135/05/2020-GST (as clarified by Circular No.173/05/2022-GST) applies only to cases where input and output are same goods attracting different rates at different points in time and not to cases where input and output are different goods. Further, CBIC Circulars do not have binding effect on the Tribunal but only persuasive role as they are instructions to departmental officers - The Supreme Court in VKC Footsteps India Private Limited case established that refund was admissible under clause (ii) where unutilized ITC accumulated due to disparity in tax rates between inputs and outputs - The adjudicating authority and first appellate authority had rightly interpreted and applied the law. The order of first appellate authority upholding the refund is sustained and Revenue appeal is dismissed
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST & Customs updates: Sep'26
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?