TaxTMI 
TaxTMI 
2026 (9) TMI 456
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 107 of the CGST Act against the Order-in-Original bearing Ref No. ZE1910230244270 dated 19.10.2023 passed by the Assistant Commissioner of CGST and Central Excise, Siliguri Division, Siliguri Commissionerate. 2. The petitioner stated that M/s North Bengal Tea & Allied (respondent herein) having GST Registration No. 19BEEPK6109R1ZW situated at H/V/57/OLD, Ganganagar, Siliguri-734005 is engaged in the purchase of tea in bulk and after blending the same is sold in packaged form in containers, pouches/ jars/ sachets, etc. The inputs are bulk tea taxable @ 5% and packing materials taxable @ 12% and /18%. The output supply of packaged tea is taxable @ 5%. Further, the respondent also claims refund of accumulated Input Tax Credit (in short 'ITC') under Section 54(3)(ii) of the CGST Act, 2017 arising due to inverted tax structure on regular basis. 3. The Revenue (petitioner) have further disclosed that the respondent has filed for refund of accumulated ITC under the inverted tax structure for an amount of Rs. 7,83,547/- for the period from 01.03.2021 to 30.11.2021 with the jurisdictional Officer i.e., the Assistant Commissioner of CGST and Central Excise, Siliguri Division, Siligur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e case was admitted. The respondent appeared and filed his Cross Objection through Authorized Representative Shri Avijit Dutta, Chartered Accountant. 5.4 During the course of argument, the Revenue contended that the first Appellate Authority has relied upon the decision of Hon'ble High Court of Calcutta in the matter of M/s. Shivaco Associates. The Hon'ble Court has held in the instant case that the Act does not mention about non-granting of the benefit of accumulated input tax credit where the input and output supplies are the same. The circular is trying to restrict the refund to a particular set of supplies. The circular is trying to create a class inside the class, which is impermissible. According to the act, refund is permissible in respect of all classes where the input tax is higher than the output tax. By way of the circular, the Board is curtailing the said benefit and making refund permissible only if the input and output supplies are different. The same amounts to overreaching the provisions as laid down in the Act. It cannot be said that the legislature was unmindful of the fact that there may be instances where the input and output supplies are the same. On the con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y has not considered the above and rejected the appeal filed by the Department & passed order in favour of the respondent which is not in accordance with the provision of clause (ii) of first proviso to section 54(3) of the CGST Act, 2017. 5.6 Shri Dulal Sinha Ray, Superintendent, CGST, Authorized Representative of the Revenue appeared through virtual mode and argued the case at length. 6. Shri Avijit Dutta, CA, Authorized Representative of the respondent appeared and advanced his arguments on the grounds raised by the Revenue. 6.1 With respect to the ground raised by the Revenue vide para 5.1 above, the respondent submits that the Revenue is contesting on the fact that in the instant case, both the principal input and output are same i.e., tea which attracts GST @ 5%. However, in the instant case the inputs are bulk tea and packing materials and the output supply is tea in packaged condition. Packaging is an integral part of the supply without which the tea cannot be sold. The output supply is a composite supply in which tea is the primary supply. Thus, tax rate of 5 % is attracted on the output supply. The inputs and output supply are not same. Further, there has been no....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ew provisions. A circular cannot supplant or implant any provision which is not available in the Act. The same principle is applicable in the case of the respondent taxpayer also. 6.4 Further, with respect to the grounds raised by the Revenue vide para 5.5 above, the respondent contends that there is no distinction between principal input and packing materials in section 54(3) of the CGST Act, 2017. The packing materials are inputs in terms of section 2(59). Further, CBIC vide Circular No. 79/53/2018 dated 31.12.2018 also clarified that packing materials are eligible inputs. The higher tax rate in packing materials results in accumulation of ITC for which refund has been claimed in accordance with section 54(3)(ii). 7. We have carefully heard the arguments of both the parties, gone through the grounds of Appeal and examined the records minutely. The issue involved is (a) Whether the respondent is entitled for the refund under inverted duty structure covered under Section 54(3)(ii) of the CGST Act, 2017 and (b) Whether the Circular No. 135/5/2020 GST is applicable in the facts and circumstances of the case. 8. We are of the view that the Revenue is contest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e refund of accumulated ITC is not confined to ITC accumulated on a singular input. Thus, there may be multiple inputs that may be used or consumed for effecting the output supplies. The use of the words 'output supplies' also indicates that the taxpayer's output supply may not be singular. In such circumstances, it would be necessary to determine whether the accumulation of any unutilised ITC is on account of the rate of tax on inputs exceeding the rate of tax on the output or for any other reason. In case where the accumulation of ITC is attributable solely to the rate of tax on inputs exceeding the rate of tax on output supplies, the taxpayer's claim for refund on accumulated unutilised ITC will squarely fall under Clause (ii) of proviso to sub-section (3) of Section 54 of the CGST Act." ------ 26. As stated at the outset, a taxpayer's claim for refund, which is admissible under Section 54 of the CGST Act, cannot be denied on account of a Circular issued by CBIC under Section 168(1) of the CGST Act. Plainly, if the Circular No. 135/05/2020 is read in the manner as contended by the Revenue, it would be in conflict with the provisions of Secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ials for being taken as ITC the same is supported by the CBIC vide para 13 of the Circular No. 79/53/2018 - GST dated 31.12.2018 which specifically recognises packing materials as eligible inputs. Hence, in light of the above, we are of the view that packing materials are eligible for availing ITC. Once goods are eligible for availing ITC, the same is allowed for refund under Section 54 of the CGST Act, 2017 unless the same is specifically disallowed by the statute. 12 With respect to the issue raised by the Revenue by relying on para 3.2 of the CBIC Circular No. 135/05/2020-GST dated 31.03.2020, we are of the view that the provisions of the said circular are applicable for the cases where there is a reduction of GST and the same is also mentioned in the heading of para 3 of the said circular. For the sake of brevity we reproduce the relevant para 3 of the circular as below: "3. Refund of accumulated input tax credit (ITC) on account of reduction in GST Rate 3.1 It has been brought to the notice of the Board that some of the applicants are seeking refund of unutilized ITC on account of inverted duty structure where the inversion is due to change in the GST rate....