The Supreme Court on Monday asked the Goods and Service Tax (GST) Council to take a policy decision and reconsider the formula in view of anomalies pointed out by assesses in computation of input tax credit (ITC) in inverted tax structure.
A bench of Justices D Y Chandrachud and M R Shah, however, upheld the Madras High Court judgement in favour of Central GST (CGST) rules that inverted duty refund is admissible only with respect to inputs for goods and not for input of services.
Acting on a batch of appeals filed by the Union government and others, the top court also set aside the Gujarat High Court judgement which declared that Rule 89(5) of CGST Rules as ultra vires Section 54(3) for restricting the refund only to input goods.
Inverted duty structure arose in products such as footwear and ready made garments due to higher taxes on input and lower tax on final product.
The top court said that, since the formula is not ambiguous in nature or unworkable and not opposed to the intent of the legislature in granting limited refund on accumulation of unutilised ITC, an anomaly per se cannot result in the invalidation of a fiscal rule which has been framed in exercise of the power of delegated legislation.
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Published 13 September 2021, 15:51 IST
