Inverted duty structure refund: entire claim cannot be rejected when the undisputed balance of input tax credit is ascertainable.

Refund of accumulated unutilised input tax credit under an inverted duty structure is governed by the statutory formula in Section 54(3) of the Odisha GST Act read with Rule 89(5) of the Odisha GST Rules, and the authority must assess the claim on the basis of the prescribed documents. Where only a limited portion of the refund is disputed on grounds of mismatch or further verification, rejection of the entire claim is not justified if the undisputed balance is ascertainable. The petitioner was therefore entitled to release of the admitted refund amount, while the disputed portion remained for determination in accordance with law.

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Issues: Whether the petitioner was entitled to refund of accumulated unutilised input tax credit arising from inverted duty structure under the statutory formula, and whether the refund rejection could stand in respect of the disputed portion of the claim.

Analysis: Refund of unutilised input tax credit in cases of inverted duty structure is governed by Section 54(3) of the Odisha Goods and Services Tax Act, 2017 read with Rule 89(5) of the Odisha Goods and Services Tax Rules, 2017, and the refund has to be computed on the basis of the prescribed formula and the supporting documents required under the governing circular. The petitioner had placed material to support the claim, while the department disputed only a limited portion of the claimed amount on the ground of mismatch and need for further verification. In such a situation, the rejection of the entire refund claim was not justified when the admitted part of the claim could be released pending adjudication of the disputed portion. The approach also accords with the principle that a taxing statute must be strictly construed according to its express terms.

Conclusion: The petitioner was held entitled to refund of the undisputed balance amount, while the disputed sum was left for final adjudication in accordance with law.

Final Conclusion: The refund rejection could not survive in full, and the petitioner obtained partial relief by securing release of the admitted refundable amount.

Ratio Decidendi: Where refund of unutilised input tax credit under inverted duty structure is governed by a statutory formula, the authority cannot reject the entire claim merely because a limited portion requires verification if the undisputed balance is otherwise ascertainable.

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