The GSTAT Kolkata Bench has dismissed Revenue’s appeals in three identical cases, holding that refund under Section 54(3)(ii) of the CGST Act for inverted duty structure is available where ITC accumulates on packing materials (taxed at 12-18%) used for output supply of packaged tea (taxed at 5%).
The Revenue contended that both the input and output are the same — tea at 5% — and therefore refund under inverted duty structure is barred by CBIC Circular No. 135/5/2020-GST.
The Tribunal held that Section 54(3)(ii) uses the expression “inputs” in plural without any distinction between principal input and ancillary inputs. Packing materials qualify as inputs under Section 2(59) and CBIC Circular No. 79/53/2018-GST. Circular No. 135/5/2020-GST applies only to cases where there is a reduction of GST rate on the same goods over time, not where the principal input and output attract the same rate but ancillary inputs attract higher rates.
The Tribunal followed the Delhi High Court in M/s Indian Oil Corporation Limited [WP(C) 10222/2023] and the Calcutta High Court in M/s Shivaco Associates.
The Pr. Commissioner CGST & CX, Siliguri Commissionerate v. M/s. Dalmia Tea Packaging Pvt. Ltd. (APL/31/KLK/2026), M/s. North Bengal Tea & Allied (APL/32/KLK/2026), M/s. Tea Linker (APL/25/KLK/2026) | 3 September 2026 | GSTAT Kolkata