TaxTMI 
TaxTMI 
2026 (9) TMI 530
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....d 29.02.2024 passed by the Assistant Commissioner of CGST and Central Excise, Siliguri Division, Siliguri Commissionerate. 2. The petitioner stated that M/s Tea Linkers (respondent herein) having GST Registration No. 19AABFT1705A1ZR situated at 163, S.P. Mukherjee Road, Khalpara, Siliguri-734005 - 734004 is engaged in the purchase of tea in bulk and supply packaged tea in containers, packets/ pouches/ sachets. The supply of packaged tea is under a brand name. The packaging tea is an integral part of the supply without which the tea cannot be sold. The inputs are bulk tea taxable @ 5% and packing materials taxable @ 12%. The output supply of packaged tea is taxable @ 5%. It is further disclosed that the output supply is a composite supply attracting 5% tax rate as the primary supply is tea. The Revenue further stated that the respondent 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. 59,26,077/- for ....
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....erted tax structure would not be admissible in case where the input and output supply are same. 5.3 On the basis of above facts mentioned in the appeal, notice was issued to the respondent and the case was admitted. The respondent appeared and filed his Cross Objection through Authorized Representative Shri Vivek Goyal, 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 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 within the class, which is not permissible. 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 overreachin....
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....se tea and the same is further sold into customized packets of different weights as per the requirement of the buyer. The First Appellate Authority has not considered the above contention of petitioner 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 Vivek Goyal, 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 and replied 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....
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....f uniformity in the implementation of the Act, orders, instructions or directions may be issued. 'Uniformity in implementation' does not mean curbing benefits available in the Act by introducing new 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 covered under 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, Grounds of Appeal and examined the records minutely. The issue involved is a) whether the respondent is entitled for the refund under the inverted duty structure covered under Section 54(3)(ii) of....
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.... to note that Clause (ii) of proviso to sub-section (3) of Section 54 of the CGST Act is applicable only where ITC has accumulated on account of "rate of tax on inputs being higher than the rate of tax on output supplies". The use of the word 'inputs' in plural clearly indicates that the 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....
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....nclude all goods used in the course or furtherance of business other than capital goods. Packing materials, labels, cartons and plastic containers are indispensable for marketing packaged tea and therefore clearly qualify as inputs. Further, with respect to the eligibility of packing materials 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 better understanding we reproduce the entire para 3 of the circular as below: "3. Refund o....
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.... the Revenue has no force as the Hon'ble High Court of Delhi in the case of M/s. Indian Oil Corporation Limited in WP (C) 10222/2023 & CM No. 39561/2023 [2023]67 TAXLOK.COM011 (Delhi) have clearly held in para 17 as below: "17. It is apparent from the plain reading of Sub-section (1) of Section 168 of the GST Act that CBIC can issue such orders, instructions, or directions only if it considers it necessary and expedient to do for the purpose of uniformity in implementation of the CGST Act. Plainly, CBIC has no power to issue circulars in derogation of the provisions of the CGST Act. CBIC can neither add to the provisions of the CGST Act nor curtail the import of any part of the enactment. Section 168(1) of the CGST Act confines the powers of CBIC to issue circulars for uniformly implementing the provisions of the CGST Act. It can do nothing further. Plainly, if the IOCL is entitled to refund in terms of Section 54(1) of the CGST Act, the same cannot be denied by virtue of any circular issued under Section 168(1) of the CGST Act." In view of the observation made by the Hon'ble Court, the argument advanced by the Revenue authority has no force and the Circular No. 135/5/2....