Rajkamal Builders vs. Union Of INDIA

Held

The Court noted that the Apex Court, in the case of VKC Footsteps India Pvt. Ltd. vs. Union of India, had upheld the decision of the Madras High Court in Tvl. Transtonneslstroy Afcons Joint Venture vs. Union of India and Others. Crucially, the Apex Court had not sustained the Gujarat High Court's order in the VKC Footsteps case. Given this development in higher judicial pronouncements, the learned advocate for the petitioner sought to withdraw the present petition. The Court granted the withdrawal as prayed for, and consequently, the petition was disposed of as withdrawn. No specific findings were made on the merits of the issues raised, as the matter was decided on the basis of the petitioner's request for withdrawal.

Facts

The petitioners, Rajkamal Builders, filed a Special Civil Application before the Gujarat High Court challenging Rule 89(5) of the CGST/GGST Rules and certain notifications that amended this rule retrospectively. They sought a declaration that these provisions were ultra vires the CGST/GGST Act and the Constitution of India, as they denied the refund of unutilized tax credit on input services. The petitioners also sought a direction to allow the accumulated unutilized input tax credit on input services while granting refunds. The respondents are the Union of India and other related authorities. The procedural history indicates that the matter was brought before the High Court.

Key Issues

1. Whether Rule 89(5) of the CGST/GGST Rules, to the extent it denies the grant of refund of unutilized tax credit in respect of tax paid on input services, is ultra vires and de hors Section 54(3) of the CGST/GGST Act and/or the Constitution of India? 2. Whether Notification No. 26/2018-C.T. and Notification No. 26/2018-State Tax, dated 13-6-2018, which retrospectively amend Rule 89(5) of the CGST and GGST Rules with effect from 1st July, 2017, are ultra vires and de hors Section 54(3) of the CGST/GGST Act and/or the Constitution of India? The petitioner argued that the impugned rule and notifications were unconstitutional and beyond the scope of Section 54(3) of the CGST/GGST Act, as they prevented the refund of input tax credit on input services. The revenue's arguments are not recorded in the judgment.