2018 Taxo.online 571

R/SPECIAL CIVIL APPLICATION NO. 20626 of 2018 dated 26.12.2018





Central Goods and Service Tax Act, 2017

Section 54

Harsha Devani, Justice & A. P. Thaker, Justice


High Court


Represented by: – 

Petitioner: – Mr Dhaval Shah 

Respondent: –  

Order: – 

Mr.Prakash Shah learned advocate with Mr.Dhaval Shah, learned advocate for the petitioner invited the attention of the Court to sub-section (3) of Section 54 of the Central Goods and Services Tax Act, 2017, to submit that the clause (ii) thereof provides that where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council. It was submitted that vide notification No.5/2017, the Central Board had notified the items in respect of which no refund of un-utilized items would be allowed. It was submitted that thereafter by the impugned notification dated 26th July, 2018. Central Government has amended the said notification and provided that such notification shall not apply to the input tax credit accumulated on supplies received on or after 1st Day of August, 2018 in respect of goods mentioned at serial numbers 1,2,3,4,5,6,6A,6B,6C and 7 of the Table. It was submitted that at the same time, vide clause (ii) of the proviso it has been provided that in respect of said goods, the accumulated input tax credit lying unutilized in balance, after payment of tax for and upto the month of July, 2018 on the inward supplies received up to the 31st day of July, 2018 shall lapse. It was submitted that sub-section (3) of section 54 empowers the Government to notify the goods in respect of which the proviso to sub-section (3) of section 54 would not apply. However, the said section does not in any manner empower the Government to provide for lapsing of the input tax credit. It was submitted that the respondents are therefore not granting refund to the petitioner unless the petitioner reverses the input tax credit received upto 31st July, 2018. It was submitted that therefore, the impugned notification to the extent the same provides for lapsing of the input tax credit, is ultra-vires sub-section (3) of section 54 of Central Goods and Services Tax Act. Having regard to the submissions advanced by the learned advocate for the petitioner, Issue Notice returnable on 18th January, 2019. By way of ad-interim relief, the petitioner is permitted to reverse the input tax credit subject to the final outcome of the petition. 

To be heard with Special Civil Application No.16213 of 2018. Direct service qua Respondent Nos.2, 3 and 4 is permitted. 

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