GST Refund-inverted tax structure – where input and output supplies are same

In BMG INFORMATICS PVT. LTD., VERSUS THE UNION OF INDIA AND 3 ORS., THE COMMISSIONER CENTRAL GOODS AND SERVICE TAX GUWAHATI, THE JOINT COMMISSIONER (APPEALS) CGST CENTRAL EXCISE AND CUSTOMS GUWAHATI, THE ASSISTANT COMMISSIONER CGST AND CENTRAL EXCISE DIVISION II [2021 (9) TMI 472 - GAUHATI HIGH COURT]:

1. Information technology products were supplied to Government Departments, PSU and to other Research and Educational Institutes located in the North Eastern region availing benefit in terms of The Notification 45/2017-Central Tax (Rate).

2. Refund application was filed under the category - ITC accumulated due to inverted tax structure and the refund application was rejected on the ground that the input and output being the same does not get covered under the provisions of clause (ii) of sub-section (3) of section 54 and as per the clarification issued by Circular No.135/05/2020-GST.

3. Hon’ble GAUHATI HIGH COURT held that:

in view of the clear unambiguous provisions of Section 54(3) (ii) providing that a refund of the unutilized input tax credit would be available in the event the rate of tax on the input supplies is higher than the rate of tax on output supplies, we are of the view that the provisions of paragraph 3.2 of the circular No.135/05/2020-GST dated 31.03.2020 providing that even though different tax rate may be attracted at different point of time, but the refund of the accumulated unutilized tax credit will not be available under Section 54(3)(ii) of the CGST Act of 2017 in cases where the input and output supplies are same, would have to be ignored.