Page 48 - GSTL_2nd July 2020 _Vol 38_Part 1

J22 GST LAW TIMES [ Vol. 38
The circular was issued in wake of Rule 36(4) of CGST Rules, 2017 as amended.
Rule 36(4) prescribed that ITC shall be entitled to the extent of the invoices upload-
ed by the suppliers and gives another 10% [20% up to 31-12-2019] of the matched
ITC in addition to the unmatched ITC.
The above referred clarification of Circular No. 135, ibid, to restrict the
refund of ITC to the extent of invoices reflected in GSTR-2A is not valid inter alia
for the reasons below :-
 Firstly, Rule 36(4), ibid, itself suffers from the legal infirmity and au-
thor is of strong view that it would get struck down by the Courts in
future. Consequently, the clarification based on such ill-founded
Rule would also get the same treatment.
 Even assuming Rule 36(4), ibid, is valid, it does not require the in-
voice level matching to avail ITC, and it requires the matching only
at the consolidated level. The same was clarified by the Circular No.
123/42/2019-GST, dated 11-11-2019 [2019 (30) G.S.T.L. C25] (a rele-
vant portion is given below)

2. Whether the said re- The restriction imposed is not supplier-wise.
striction is to be cal- The credit available under sub-rule (4) of
culated supplier-wise rule 36 is linked to total eligible credit from all
or on consolidated ba- suppliers against all supplies whose details
sis? have been uploaded by the suppliers. Fur-
ther, the calculation would be based on
only those invoices which are otherwise
eligible for ITC. Accordingly, those invoic-
es on which ITC is not available under any
of the provision (say under sub-section (5)
of section 17) would not be considered for
calculating 20 per cent. of the eligible cred-
it available.

 Further, Rule 36(4) gives 20/10% extra ITC in addition to the
amount of ITC on the invoices reflected in GSTR-2A which was ig-
nored by the Circular No. 135, ibid, thereby denying the refund of
ITC even though it was eligible u/r. 36(4), ibid.
Hence, restricting the refund to the extent of invoices reflected in GSTR-2A runs
contrary to the Rule position and previous circulars. In this connection, it is worth
noting that
• Circular contrary to the statutory provisions has really no existence
in law. Relied on Commissioner v. Ratan Melting and Wire Industries -
2008 (12) S.T.R. 416 (S.C.)
• Circulars are meant to clarify the law and not to lay down a law.
Further circular cannot impose limitations/conditions which are not
provided in the statute and further it cannot take away the rights
conferred by statute. Reliance is placed on Tata Teleservices Ltd. v.
Commissioner - 2006 (194) E.L.T. 11 (S.C.).
• Circulars cannot prevail or override the express provision of law.
Reliance is placed on All Kerala Association of Chit Funds v. Union of
India - 2013 (29) S.T.R. 557 (Ker.) and recently Hon’ble Delhi HC in
case of Bharti Airtel Ltd. v. UOI - 2020 (5) TMI 169 - Delhi High
Court has struck down the Circular No. 26/26/2017-GST, dated
GST LAW TIMES  2nd July 2020  48