Section 54 of the CGST Act, 2017 – Refund – In cases where input and output supplies are same - The petitioner challenged the impugned order dated 26.11.2020 and the impugned order passed by the appellate authority dated 10.12.2021 rejecting the refund claim of the petitioners. Prior to 25.01.2018 the input and output tax on liquefied petroleum gases to commercial as well as domestic consumers was 18%. By a notification dated 28.06.2018, the rate of output tax on domestic LPG has been reduced to 5%. The petitioners claim refund of the unutilized ITC accumulated on account of inverted tax structure, which was rejected relying on a circular No. 135/2020-GST dated 31.03.2020 wherein it has been mentioned that the tax-payers cannot claim refund in terms of clause (ii) of Section 54(3), in cases where the input and output supplies remain the same. The petitioners submitted that the respondents cannot take advantage of the said circular as the Act permits such refund. The petitioners rely upon the judgment and order passed by the Guwahati High Court on 02.09.2021 in case B.M.G Informatics Pvt. Ltd. V. Union of India and Ors, wherein the Court was of the view that the provisions of the circular dated 31.03.2020 providing that even though different tax rates may be attracted at different points of time but the refund of accumulated unutilized tax credit will not be available under Section 54(3)(ii) of the Act. The court observed that 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 refund of any unutilized input tax credit may be claimed where credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies. The Act does not restrict refund only in respect of supplies which are different at the input and output stage. Moreover, “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 circular dated 31.03.2020 is imposing a restriction to release certain benefits which are provided under the Act. 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.

The legislature consciously did not create any distinction for allowing refund in all cases where the input tax is more than the output tax. The said benefit is applicable to all similar cases.

Held that:- The Hon’ble High Court set aside the impugned orders passed by the adjudicating authority and the appellate authority and held that the petitioners will be entitled to the refund as claimed.