Empire Foundation Vs Union Of India & Ors. (Gujarat High Court)
In the case of Empire Foundation Vs Union of India & Ors., the Gujarat High Court dismissed a petition challenging the constitutional validity of Section 17(2) of the CGST Act, 2017. The petitioner sought to declare the provision unconstitutional as it restricted refunds under the inverted duty structure. Additionally, they requested the recognition of their right to claim a refund of accumulated Input Tax Credit (ITC) on goods and services used for exempted services. The petitioner relied heavily on the earlier Gujarat High Court judgment in VKC Footsteps India Pvt. Ltd. Vs Union of India, which was subsequently overturned by the Supreme Court.
The Court noted that the Supreme Court in the VKC Footsteps case had clarified that the CGST Act provisions are not ultra vires and that refund claims must align with the statutory framework. The petitioner also urged the Court to direct the GST Council to reconsider the anomalies in Rule 89(5) of the CGST Rules regarding ITC refunds. However, the Court concluded that there is no constitutional or statutory entitlement for refunds on ITC for exempted output services. It held that the petitioner’s claims were not substantiated under the law and dismissed the petition, discharging the notice.
