Harsha Developers Vs Joint Commissioner of Central Tax (Telangana High Court)
Telangana High Court Allows Taxpayer to Approach GSTAT Against Retrospective Reversal of ITC Under Amended Rule 42(3)
The Telangana High Court considered a challenge to the order-in-appeal dated 30.09.2025, which upheld reversal of Input Tax Credit (ITC), interest and penalty by retrospectively applying amended Rule 42(3) of the Central Goods and Services Tax Rules, 2017 to ITC availed before 01.04.2019, when the amended Rule came into force. The petitioner contended that such retrospective application was illegal and ultra vires the parent Act and also raised other grounds on merits. The CBIC’s Senior Standing Counsel submitted that the petitioner had an appellate remedy before the Goods and Services Tax Appellate Tribunal (GSTAT). The petitioner therefore sought withdrawal of the Writ Appeal with liberty to approach the GSTAT. The High Court disposed of the Writ Petition as withdrawn, granting liberty to the petitioner to file an appeal before the GSTAT along with the statutory predeposit and to raise all available questions of law and fact. The Court expressly stated that it had not expressed any opinion on the merits of the case. No order as to costs was made, and pending miscellaneous applications, if any, were closed.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
Heard Mr. P. Venkat Reddy, learned counsel representing M/s. P.V. Prasad Associates, for the petitioner and Mr. D. Raghavendar Rao, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC), appearing for respondent Nos.1 to 4.
2. The petitioner is challenging the order-in-appeal dated 30.09.2025 insofar as it upholds the reversal of Input Tax Credit (ITC), interest and penalty by retrospectively applying Rule 42(3) of the Central Goods and Services Tax Rules, 2017 (for short ‘the Rules’), to ITC availed prior to 01.04.2019, the date on which the amended Rule 42(3) of the Rules came into force.
3. Learned counsel for the petitioner contended that the application of the amended Rule in that fashion is illegal and ultra vires the parent Act and takes away the benefits enjoyed under the existing Rule. He has inter alia taken other grounds on merits as well.
4. Learned Senior Standing Counsel for CBIC appearing for respondent Nos.1 to 4 submits that against the impugned order-inappeal, the petitioner has a remedy of appeal before the Goods and Services Tax Appellate Tribunal (GSTAT).
5. In view of the same, learned counsel for the petitioner seeks to withdraw the Writ Appeal with liberty to the petitioner to file an appeal before the learned GSTAT.
6. Accordingly, the Writ Petition is disposed of as withdrawn with liberty to the petitioner to file an appeal along with statutory predeposit before the learned GSTAT, taking all such grounds of law and facts available to it. Needless to say, this Court has not expressed any opinion on the merits of the case. No order as to costs.
Miscellaneous applications pending, if any, shall stand closed.
