TaxTMI 
TaxTMI 
2026 (7) TMI 1337
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....the petitioner challenges the order dated 17.03.2025. The petitioner's case is that it is engaged in the manufacture of combed cotton yarn. For this purpose, the petitioner purchases raw cotton yarn and undertakes a process involving the application of chemicals and other inputs, resulting in the production of combed cotton yarn. 3. According to the petitioner, the rate of tax applicable to the principal input, namely, raw cotton yarn, is 5%, which is the same as the rate applicable to the output product, viz., combed cotton yarn. However, certain other inputs, such as chemicals, consumables and packing materials, attract GST at rates of 12% and 18%, whereas the output supply is taxable only at 5%. Consequently, owing to the higher r....
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.... 18.11.2019, which clarifies that where multiple inputs attract different rates of tax, the formula prescribed under Rule 89(5) of the CGST Rules must be applied irrespective of the individual rates of tax applicable to such inputs. 9. In support of the above contention, reliance was placed on the judgment of the Karnataka High Court in Indian Oil Corporation Ltd. v. Assistant Commissioner of Central Tax [(2025) 174 taxmann.com 1 (Kar.)], wherein the Court specifically considered Circular No. 135/05/2020-GST and held that the CBIC cannot issue circulars contrary to the provisions of the statute. The Karnataka High Court observed that Section 54(3) concerns the accumulation of unutilized input tax credit and does not prescribe any require....
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....cipal input and the output supply is identical, no claim for refund under an inverted duty structure can be maintained. It was contended that a proper interpretation of Section 54(3)(ii) of the CGST Act would lead to the same conclusion. 14. Referring to paragraph 9 of the counter affidavit, the learned Senior Standing Counsel submitted that the value of outward supplies in the present case substantially exceeds the value of inputs, and that the cost of packing materials and other ancillary inputs is absorbed into the value of the finished goods. Accordingly, the respondents contend that no inverted duty structure exists in the present case. The learned Senior Standing Counsel also sought to distinguish the decisions relied upon by the p....
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.... (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than--- (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council. (Emphasis supplied) 17. Thus, it can be seen that the statute does not make any distinction between major and minor co....