2026-VIL-152-GSTAT-KOL
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SGST Tribunal

GST - Refund of accumulated ITC on inverted duty structure - Section 54(3)(ii) of CGST Act, 2017 - Respondent purchased loose goods in bulk attracting a lower rate and supplied them in customised packets, while packing materials attracted a higher rate - Appellant-Revenue contended that refund is not available where input and output supplies are the same and attract the same rate - Whether the Respondent is entitled to refund of accumulated ITC under Section 54(3)(ii) - HELD - Packing materials are goods used in the course or furtherance of business and qualify as inputs under Section 2(59). The Respondent purchased bulk goods as inputs at the lower rate and made outward supplies in packets, with packing materials carrying the higher rate, so ITC accumulated because the rate of tax on inputs was higher than the rate of tax on output supplies. This squarely falls within clause (ii) of Section 54(3) - The issue is covered by the earlier decision of this Tribunal in Tea Linker, where packing materials indispensable for marketing the packaged goods were held to be inputs - The first appellate authority rightly upheld the refund. Revenue is directed to refund the sanctioned amount - The appeal is dismissed - Circulars restricting refund of accumulated ITC where input and output are the same - Section 168(1) of CGST Act, 2017 - Circular 135/05/2020-GST and Circular 173/05/2022-GST - Appellant-Revenue relied on para 3.2 of the circular that clause (ii) of Section 54(3) is not applicable where the input and output supplies are the same - Whether refund can be denied on the strength of the circulars - HELD - Section 168(1) empowers the Board to issue orders only for the purpose of uniformity in implementation of the Act. The Board can neither add to the provisions of the Act nor curtail the import of any part of the enactment, and if the claimant is entitled to refund under the Act it cannot be denied by a Circular - A Circular cannot supplant or implant any provision not available in the Act, and the Act does not restrict refund only to supplies that are different at the input and output stage. The reliance of the Revenue on the circulars is misplaced.
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