ORDER

Heard learned counsel for the petitioner and learned Senior Penal Counsel for the respondent.

2. The petitioner is a manufacturer of cotton yarn, blended cotton yarn, etc., The petitioner had filed refund claim in Application Reference No.AA330124003736P dated 02.01.2024 under Section 54 (3) of the respective GST enactments read with Rule 89(1) of the GST Rules, 2017.

3. Since the petitioner was under Inverted Duty Structure, the refund claim of the petitioner has been rejected by the respondent by placing reliance on para 3.2 of CBEC Circular No.135/05/2020-GST bearing reference CBEC-20/01/06/2019-GST. Para 3.2 of the above Circular reads as under:

“3.2 It may be noted that the refund of accumulated ITC in terms clause (ii) of 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 the rate of tax on output supplies. It is noteworthy that, 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 sub-section (3) of section 54 of the CGST Act. It is hereby clarified that ref