TaxTMI 
TaxTMI 
2026 (10) TMI 78
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....lated under clause (ii) of sub-section (3) of Section 54, CGST Act. [3]. The taxpayer, namely M/s Teesta Agro Industries Ltd., of Mazabari, Post Office Rajganj, Jalpaiguri, holding GSTIN - 19AABCT1252D1ZP is a trader engaged in supplying 'Sulphur' falling under HSN 2503 and fertilizers under HSN 3103 and 3105 who is carrying out his business from Jalpaiguri in West Bengal. The case of the taxpayer, as projected before us, is that the taxpayer purchases loose Sulphur in bulk which attracts 5% GST and sells the same product in customized packets in smaller units of specified quantities. The packaging materials classified under HSN 3923 attracts 18% GST. As a result, inversion occurred in the duty structure and unutilized ITC accumulated which entitled him to claim the refund of such accumulated ITC under Section 54(3)(ii), CGST Act. Accordingly, he filed the said refund application in Form GST RFD-01 on 09.02.2024 actually claiming a refund of accumulated ITC of Rs. 23,73,724/- pertaining to the period from 01.02.2022 to 28.02.2022 on account of Inverted Duty Structure which was partially sanctioned by the Refund Sanctioning Authority for Rs. 19,78,259 by Order No. ZH1904240136853....
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.... to sell 'Sulphur' by packaging the same and as such i t would be considered as an inverted-rated supply since the rate of GST on packing materials (inputs) is higher (18%) than the rate of GST on outputs - (5%). Thus, the taxpayer would be entitled to refund in terms of clause (ii) of sub-section (3) of 54 CGST Act read with Rule 89(5) of the CGST Rules and in this view of the matter, the First Appellate Authority turned down the appeal filed by the Revenue against the order of the Refund Sanctioning Authority. [6]. Aggrieved by the impugned order, Revenue has approached this Tribunal by way of filing the present appeal and it has resorted to the same grounds on which the appeal was filed before the First Appellate Authority against the order of the Adjudicating Authority. [7]. The taxpayer has uploaded cross-objections against the contentions set out in the memorandum of appeal. The gist of such cross-objections is that the taxpayer is actually engaged in the business of manufacture and sale of Agro Chemicals, and depending upon the requirements of its customers, 'Sulphur' purchased by them in bulk quantity is packaged in smaller units of specified quantities for outward su....
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.... that the Hon'ble Calcutta High Court has succinctly held in Shivaco Associates (Supra) that a Circular cannot overreach the provisions as laid down in the Act. The AR of the taxpayer, therefore, contends that for argument's sake, even if it is conceived that in the case in hand inputs and outputs are same, refund of accumulated ITC cannot be denied to the taxpayer relying on the Circular issued by CBIC as the criteria laid down in clause (ii) of sub-section (3) of Section 54, CGST Act has been clearly satisfied in the case. The AR of the taxpayer has, with reference to the Judgment of the Hon'ble Delhi High Court in the case of Indian Oil Corporation Limited (supra), has further contended that the Hon'ble Delhi High Court has also taken similar view and held that CBIC can neither add to the provisions of CGST Act nor curtail the import of any part of the enactment by issuing such Circular in exercise of power conferred under Section 168(1) CGST Act. The AR of the respondent, therefore, contends that the impugned order does not call for any interference. [9]. A similar issue was dealt with by this Tribunal in the case of The Principal Commissioner Versus M/s Tea Linker of Siligu....
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....irections 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. 135/5/2020 GST is not applicable in fact and circumstances of this case. 15 We find that since the issue of eligibility of ITC with respect to the packing materials is already addressed and we find that the same is available under the CGST Act, 2017 and hence the same is also eligible for taking refund under Section 54(3)(ii). Further, the Revenue's reliance on par....
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....ercise of the powers conferred under Section 168(1) of the CGST Act, 2017. 18. According to Section 168(1) of the Act the Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of the Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of the Act shall observe and follow such orders, instructions or directions. 19. The respondents, relying upon the aforesaid circular, are restricting the claim of the petitioners which is otherwise admissible under the Act. Had the circular not been there, then the petitioners' claim would have been allowed. 20. The issue at present is whether the benefit which is available under the Act can be taken away and/or restricted by the circular. 21. Any circular issued under Section 168(1) of the Act is only for the purpose of bringing uniformity in the implementation of the Act. The intention of the legislature as expressed in Section 54(3) of the Act is clear and unambiguous. The Section, in absolute uncertain terms, mentions that....
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....GST Act. This is expressly stated in the opening paragraph of the said Circular. It is thus relevant to refer to Sub-section (1) of Section 168 of the CGST Act, which reads as under: "168(1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions." 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 C....
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....ucture would not be applicable where the input and the output goods are the same and the impugned orders deserve to quashed and the respondent is to be directed to grant refund in favour of the petitioner on this ground also. 12. It is also seen that where there are multiple inputs attracting different rates of tax, as per the formula provided in Rule 89(5) of the CGST Rules, the expression/term "Net ITC" covers the ITC availed on all inputs in the relevant period, irrespective of their rate of tax as per paragraph-54 of the Circular bearing No.125/44/2019-GST dated 18.11.2019 issued by the respondent and the claim of the petitioner deserves to be upheld on this ground also. 13. Under identical circumstances in relation to the petitioner's own case, the Delhi High Court in the case of Indian Oil Corporation Ltd vs Commissioner of CGST - 2023(13) Centax 228 (Del), held as under:- "1. The petitioner (hereafter 'IOCL') has filed the present petition being aggrieved by denial of claims for the refund of accumulated Input Tax Credit (hereafter 'ITC'). The same was denied to the petitioner on the ground that the rate of tax on input supply and output supply are....
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....or domestic use. In view of the aforesaid findings, the Supreme Court held that the same amounts to production. 7. The petitioner has two bottling plants in Delhi for supply of LPG. One is located at Tikri Kalan and the other at Madanpur Khadar. 8. The bulk LPG used as the principal input, as well as bottled LPG supplied by the petitioner, are chargeable to Goods and Service Tax (hereafter 'GST') at the rate of 5% in terms of Entry No.165 and 165A of Schedule I appended to CGST Notification Ref. No. 1/2017-CT (Rate) dated 28.06.2017. However, the petitioner also uses various other items in the production of bottled LPG, which includes accessories required for the purpose of safety. The said items are chargeable to varying rates of GST. 9. The petitioner applied for refund of accumulated ITC for various tax periods. A summary of the applications filed in Form GST RFD-01 and the period for which the said applications were filed are set out below: Sl No Date of filing Period Amount (in Rs.) 1 4-3-2022 October, 2018 to December, 2019 8,63,48,590 2 4-3-2022 January, 2020 2,03,31,108 3 11-3-2022 February, 2020 2,2....
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....at in terms of Clause (ii) of the proviso to Section 54(3) of the CGST Act, the refund of ITC is impermissible in cases where input and output supplies are the same. 14. The Appellate Authority found no fault with the orders passed by the Adjudicating Authority and accordingly upheld the denial of refund of accumulated ITC to the petitioner. The relevant extract of the impugned order is set out below: "6. I find that the adjudicating authority has rejected the appellant's all five refund claims on identical ground i.e. by relying on para 3.2 of Circular No. 135/5/2020-GST dated 31.03.2020 that the input and the output both are taxable @5% GST and the inverted duty structure is not applicable in the appellant's case and the other inputs which are taxable @18% GST formed a very minor part of total input utilized / availed by them. In this context, the adjudicating authority has mentioned para 3.2. of Circular No. 135/05/2020-GST dated 31.03.2020 in the impugned order, which is reproduced hereunder: "3.2 It may be noted that refund of accumulated ITC in terms clause (ii) of sub-section (3) of section 54 of the CGST Act is available where the credit has accum....
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....ns of Clause (ii) of Sub-section (3) of Section 54 was inapplicable, where input and output supplies are the same. 16. Before proceedings to examine the import of Circular No. 135/05/2020 issued by the Central Board of Indirect Taxes and Customs (CBIC), it is important to note that the said Circular was in exercise of powers under Section 168(1) of the CGST Act. This is expressly stated in the opening paragraph of the said Circular. It is thus relevant to refer to Sub-section (1) of Section 168 of the CGST Act, which reads as under: "168(1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions." 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 i....