2026-VIL-244-GSTAT-KLK
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SGST Tribunal

GST - Refund of accumulated Input Tax Credit due to inverted duty structure under Section 54(3)(ii) of the CGST Act, 2017 where inputs and output supplies are the same - Respondent, a trader of tea, purchased bulk tea and packing materials and supplied packaged tea at 5%, whereas packing materials attracted 18% - Refund claim was rejected by the Refund Sanctioning Authority on the ground that inward and outward supplies are the same commodity attracting the same rate of tax - Whether the Respondent-assessee is eligible for refund of accumulated Input Tax Credit under Section 54(3)(ii) - HELD - The issue is squarely covered by an earlier decision of the Tribunal, where packing materials, cartons and plastic containers indispensable for marketing packaged tea were held to be inputs under Section 2(59) and where the Circulars were held applicable only to reduction in the rate of tax on the same goods over a period of time. The Circulars cannot restrict a refund otherwise admissible under Section 54(3) of the Act, as a circular issued under Section 168(1) can only ensure uniformity in implementation and can neither add to nor curtail the Act - The Calcutta High Court and the Delhi High Court have held that refund cannot be denied merely because input and output supplies are the same, and that the word inputs is used in plural and does not require comparison of the rate on principal input with that on output. The principal input attracts 5% while packaging materials attract 18% against output supplies at 5%, and the inverted duty structure has resulted in accumulation of Input Tax Credit - The Respondent is held eligible for refund under Section 54(3)(ii) - The order of the FAA is upheld and the appeal of the Revenue is dismissed
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