SC reject the challenge against Section 54(3) , that it violates equality doctrine provided by the Constitution.


The apex court said that section 54(3)(ii) of Central Goods and Services Act does not include unutilised input tax credit that collected on account of input services.
Rule 89(5) of Central Goods and Services Act Rules,2017 which restrict the refunds only to input goods, had behaved like ultra vires Section 54 (3) of the CGST Act said in the judgement of Gujarat High Court which further get upheld by the judgement of Madras High Court.
Section 54 of CGST Act provides for refund of tax
Clause (3) refund of unutilised input tax credit in cases involving : zero rated supplies made without payment of tax ; and credit accumulation “ on account if rate of tax on inputs being higher than rate of tax on output supplies”.
The Petitioner had conducted before the High Court that Section 54 (3) provide for a refund of ITC originating in inputs as well as input service, Rule 89(5) was ultra vires as it excludes tax on inputs services as the preview of the formula.
They further more claimed that if this section is shown as a restriction to claim the refund of accumulated ITC by restricting it to only tax on input then it would be considered as unconstitutional as it promotes discrimination between input and input service.
Reported by
Anjali Yadav
Banasthali Vidyapith

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Manish Tiwari


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