GST Circular No 173/2022
Circular 173/05/2022 substitutes para 3.2 of the Circular No. 135/05/2020
“3.2 Refund of accumulated ITC in terms of clause (ii) of first proviso to sub-section (3) of section 54 of the CGST Act is available where the credit has accumulated on account of rate of tax on inputs being higher than that on output. Since the input and output being the same in such cases, though attracting different tax rates at different points in time, do not get covered under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act.
3.3 There may however, be cases where though inputs and output goods are same but the output supplies are made under a concessional notification due to which the rate of tax on output supplies is less than the rate of tax on
inputs. In such cases, as the rate of tax of output supply is less than the rate of tax on inputs at the same point of time under concessional notification, the credit accumulated on account of the same is admissible for refund under the provisions of clause (ii) of the first proviso to sub-section (3) of section 54 of the CGST Act, other than the cases where output supply is either Nil rated or fully exempted or are notified by the Government for their exclusion from refund of accumulated ITC under the said clause.”
