Shan Textiles Private Limited vs. Union Of INDIA
Held
The Court did not decide the merits of the case. The petitioner's counsel, Mr. Avinash Poddar, sought withdrawal of the petition. This request was based on the fact that the Apex Court had already upheld the decision of the Madras High Court in Tvl. Transtonneslstroy Afcons Joint Venture vs. Union of India and Others, and had not sustained the Gujarat High Court's earlier order in VKC Footsteps India Pvt. Ltd. vs. Union of India. Consequently, the Court granted the withdrawal as prayed. The petition was disposed of as withdrawn. No specific findings were made on the constitutional validity of Rule 89(5) or Section 54(3) of the CGST/GGST Act, nor were any operative directions issued beyond disposing of the petition.
Facts
The petitioner, Shan Textiles Private Limited, filed a Special Civil Application before the Gujarat High Court challenging Rule 89(5) of the CGST/GGST Rules. The petitioner sought a declaration that this rule, to the extent it denies refund of unutilized tax credit on capital goods, is ultra vires Section 54(3) of the CGST/GGST Act and the Constitution of India. They also sought directions to consider accumulated unutilized input tax credit on capital goods while granting refunds. The respondents were the Union of India and other authorities. The petitioner's counsel, Mr. Avinash Poddar, sought withdrawal of the petition.
Key Issues
1. Whether Rule 89(5) of the CGST/GGST Rules, by denying refund of unutilized tax credit on capital goods, is ultra vires Section 54(3) of the CGST/GGST Act and/or the Constitution of India? 2. Whether Section 54(3) of the CGST/GGST Act, read with the amended Rule 89(5), contravenes the Constitution of India by denying refund of unutilized tax credit on capital goods? The petitioner argued that Rule 89(5) is ultra vires and unconstitutional as it restricts the refund of unutilized input tax credit on capital goods, which they contended should be permissible under Section 54(3) of the Act. The petitioner relied on the principle that subordinate legislation cannot override the parent Act. The revenue's contentions are not recorded in the judgment.
Sections Cited
Section 54(3), Rule 89(5)
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Cause title — parties, addresses and appearances
ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI)
The petitioner is before this Court seeking following reliefs: - “(a) To issue writ of or in the nature of a mandamus or any other appropriate writ, order or direction holding and declaring that the Rule 89(5) the CGST Rules / GGST Rules, to the extent that the said provision denies grant of refund of unutilized tax credit in respect of tax paid on capital goods is ultra vires and de-hors to Section 54(3) of
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