The Hon’ble High Court of Gujarat vide Special Civil Application No. 14155 OF 2018 dated September 18, 2018 stated that Rule 89(5) of CGST Rules, 2017, as amended vide Notification Nos. 21/2018-CT and 26/2018-CT, denies grant of refund of unutilized tax credit in respect of tax paid on input services which is ultra vires to Constitution as well as CGST 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 and notice was to be issued and impugned demand notice was to be stayed.
Citation: [2018] 97 taxmann.com 492 (Gujarat)