Gujarat High Court on 18/09/2018 grants interim stay on the retrospective amendment in case of inverted duty refunds whereby refund on input services was denied by notification dated 13-06-2018 w.e.f. 01-07-2017. This is welcome news for persons consuming job work and other service for outward supplies of fabrics and other textile articles.
Full text of the Order of Hon’ble Gujarat High Court
In the context of nature of challenge vis-a-vis prayer clause 17 to hold and declare Rule 89(5) of the Central Goods and Services Tax Rules, 2017 as amended vide Notification No. 21/2018-Central Tax dated 18.4.2018 and Notification No.26 /2018-Central Tax dated 13.6.2018 to the extent that the said provision denies grant of refund of unutilized tax credit in respect of tax paid on input services is ultra vires to the Constitution of India and provisions of the Central and Service Tax Act, 2017, our attention is invited to Sections 53, 54 of Chapter XI pertaining to “Refund” of the Act, 2017 and specifically sub-section (3) (ii) along with un-numbered proviso of the very section in juxtaposition to definition of “input”, “input services”, “input tax”, “input tax credit” respectively under Sections 2 (59) (60) (62) and (63) of the Act and Rule 89 about application for refund of tax, interest, penalty, fees or any other amount so existed which came to be later on amended vide notification No.21/2108 dated 18.4.2018 and notification No.26/2018 dated 13.6.2018 and without disputing the fact about existence of power of amending the Rule with retrospective effect, contentions are raised based on grounds of challenge that impugned amended Rule 89(5) denies the benefit of refund of unutilized input tax credit and demand notice dated 21.6.2018 is illegal.
Considering the above, prima facie, we are inclined to issue Notice returnable on 10.10.2018.
Meanwhile there shall be ad-interim relief as prayed for in para 17(D) meaning thereby the impugned demand notice dated 21.6.2018 and its operation and implementation is stayed hereby.