The Rajasthan High Court issued the notice to the Central Board of Indirect Taxes and Customs (CBIC) on a plea challenging validity of rule 89(5) so as to allow refund of input services or capital goods.
The petitioner, Mahabali Sales Corp has prayed before the court to declare that the amendment made to Rule 89(5) of the CGST Rules denying refund of unutilized input tax credit on account of inverted duty structure in the case of input services is ultra-vires Section 54(3) of the CGST Act, in as much as Section 54(3) provides for refund of ‘any unutilized input tax credit’ accumulated on account of inverted duty structure thereby covering credit of both ‘inputs’ and ‘input services’, by issuing a writ of declaration or a writ in the nature of declaration or any other appropriate writ, order or direction.
“Declare that the amended Rule 89(5) of the CGST Rules is violative of Article 14 of Constitution of India, in as much as it discriminates between registered persons with accumulated credit on inputs and registered persons with accumulated credit on input services without any intelligible differentia and rational nexus to the objects of the CGST Act, by issuing a writ of declaration or a writ in the nature of declaration or any other appropriate writ, order or direction,” the petition said.
The petitioner has pleaded to declare the amendment to Rule 89(5) cannot be given retrospective application, by issuing a writ of declaration or a writ in the nature of declaration or any other appropriate writ, order or direction.
The division bench of Justice Sangeet Lodha and Justice Rameshwar Vyas issued notice, returnable within four weeks; be given dasti to the learned counsel for the petitioner for service upon the respondent authority.
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