Union of India Vs SICPA India Private Limited (Sikkim High Court)
Sikkim High Court held that section 54 of the Central Goods and Services Tax Act [CGST Act] doesn’t envisage refund of unutilized ITC for closure of business. Thus, rejection of refund application is within parameters of section 54 and lawful.
Facts- The writ appeal preferred by the Union of India desires the interpretation of section 49(6) and section 54(3) of the Central Goods and Services Tax Act, 2017 by the Division Bench. The interpretation of the provisions arises as the respondent – SICPA India Private Ltd. insists that the unutilised Input Tax Credit is required to be refunded by the appellant under section 49(6) of the CGST Act. SICPA succeeded before the writ Court and therefore, the Union of India has preferred this appeal.
Conclusion- Held that in the impugned judgment, it was opined that the CGST Act does not provide for retention of tax without the authority of law. It is not the case of SICPA that the accumulated ITC is outside the provisions of ‗Chapter X‘. This means that the accumulation of ITC is through a legal statutory process. The refund envisaged by the Parliament on account of accumulated ITC is only in accordance with the provisions of section 54. Section 54, however, does not envisage refund of unutilised ITC for closure of business. Thus, the rejection of the refund application is also within the parameters of section 54 and therefore, lawful. In such view of the matter, it could not have been held that the appellants were retaining tax without the authority of law.
