Section 54 of the CGST Act, 2017— Refund –-- The petitioner assailed Refund rejection Order in Form RFD 06 dated 05.01.2021. The counsel for the petitioner submitted that they are entitled to refund under the inverted duty structure as provided under the Act. The refund claim was rejected in light of the Circular dated 31.03.2020, which stipulates that refund under the inverted duty structure in terms of Section 54(3)(ii) of the Act would not be available where the input and output supplies are the same. This circular is in the nature of an explanation and was issued on 31.03.2020 whereas the petitioner’s claim for refund was a prior period between September, 2018 to September, 2019 on which date, the clarification dated 18.11.2019 was in force which clearly stipulates that a registered dealer who supplies goods at concessional rate is eligible for refund under the Inverted Tax Structure. The counsel relied on the judgment of B.M.G. Informatics Pvt. Ltd. of Hon’ble Guwahati High Court and judgment of Hon’ble Calcutta High Court in the case of M/s. Shivaco Associates. The court observed that the circular dated 31.03.2020, being a subordinate legislation, is repugnant and conflicting to the parent legislation i.e. Section 54(3)(ii) of the Act and hence, the same cannot be applied to oust the legitimate claim for accumulated ITC refund filed by the petitioner. Otherwise also, the claim for refund of ITC filed by the petitioner was for a period prior to issuance of the circular dated 31.03.2020.

Held that:- The Hon’ble High Court set aside the order dated 05.01.2021 and directed the respondents to refund the accumulated input tax credit to the petitioner as per its entitlement.