Whether circular curb the benefits available in the Act Or Not – Refund Allowed – Calcutta High Court

The Hon’ble High Court of Calcutta vide its order dated 11th March 2022 in the matter of M/s Shivaco Associates & Anr.  Vs. Joint Commissioner of State Tax, Directorate of Commercial Taxes & Ors. in WPA No. 54 of 2022, held that a circular cannot supplant or implant any provision which is not available in the Act.  The circular No. 135/2020-GST dated 31.03.2020 relied on by the respondents, is restricting the claim of the petitioners which is otherwise admissible in the Act, thus allowed the refund of the unutilized ITC accumulated on account of inverted duty structure.

The Petitioners filed the present writ petition praying for setting aside the impugned order passed by the Assistant Commissioner, Siliguri dated 26.11.2020 and the impugned order passed by the appellate authority, the Joint Commissioner, State Tax Siliguri dated 10.12.2021 for the period 01.10.2018 to 31.12.2018.


  • The petitioners are engaged in the business of purchasing LPG gas in bulk through tanker and thereafter bottling the same in bottles / cylinders of 4kgs, 6kgs, 14kgs, 17kgs and 21kgs and sell the same to commercial customers on GST applicable at the rate of 18% and to the domestic customers at the rate of 5%.
  • That prior to 01.2018, the input and output tax on liquefied Petroleum Gases to commercial and domestic consumers was 18%, however by notification dated 28.06.2018 the rate of output tax on domestic LPG was reduced from 18% to 5%.
  • As the rate of tax on inputs as compared to output was higher, the petitioner filed a refund claim of unutilized ITC accumulated on account of inverted duty structure for the 10.2018 to 31.12.2018.
  • The aforesaid refund claim of the petitioners was rejected by the adjudicating authority relying on circular No. 135/2020-GST dated 31.03.2020 and stated ‘taxpayers cannot claim refund in terms of clause (ii) of Section 54(3) of the CGST Act, 2017 in case where the input and output supplies remain the same’.
  • The appeal preferred by the petitioners against the aforesaid adjudicating authority was also rejected by order dated 12.2021.

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