2026 (4) TMI 1338

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.....2020 passed by the Assistant Commissioner (CGST), Jodhpur, whereby the refund claims of the petitioner came to be rejected, as well as the Order-in-Appeal dated 26.02.2021 passed by the Additional Commissioner (Appeals), Jodhpur, whereby the appeal preferred by the petitioner against the said rejection was dismissed, affirming the order of the adjudicating authority. 2. Brief facts of the present case are that the petitioner is a registered person under the Central Goods and Services Tax Act, 2017 (hereinafter, "Act of 2017") holding GSTIN No. 08AABFA4724G1ZS, and is engaged in the business of manufacturing utensils. The rate of tax on inputs, namely steel patta, and input services such as job work is 18%, whereas the rate of tax on out....

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....claim, being one of refund arising out of inverted duty structure, was thus denied to the extent of input services. 2.4 Hence, the present writ petition. 3. Learned counsel for the petitioner submits that under Section 54(3) of the Act of 2017, a registered person is entitled to refund of unutilized input tax credit where accumulation arises from an inverted duty structure, namely, where the tax on inputs exceeds that on output supplies. It is undisputed, even by the respondents, that the petitioner falls within this category. The accumulated balance reflected in the electronic credit ledger for FY 2019-20 establishes such entitlement. Rejection of the refund claim is, therefore, contrary to the statute and unsustainable. 3.1. It i....

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....hereby the finding given by Gujarat High Court in VKC Footsteps India Pvt. Ltd. vs. Union of India [C/FA/39335/2018] holding that Explanation (a) to Rule 89(5) of the CGST Rules was ultra vires Section 54(3) of the CGST Act, and directing inclusion of input services within "Net ITC" for refund purposes, was set aside. The Apex Court in fact upheld the view taken by Madras High Court in Tvl. Transtonnelstroy Afcons Joint Venture v. Union of India [CW Case No. 11470/2019], wherein it was categorically held that Section 54(3)(ii) does not violate Article 14 and that restricting refund to unutilized ITC on input goods, while excluding input services, constitutes a valid classification and a permissible legislative policy. 7. On a court query....