Natarajan: SC Judgement on IDS refund for input services. The SC has held that input services are not entitled for refund. My alternative argument, highlighting the anomaly created by the formula has been dealt with exhaustively by the SC, which observed, “In making such an assumption the formula tilts the balance in favour

[9/13, 15:44] Sekarreporter: [9/13, 15:19] Gst Case Natarajan: SC Judgement on IDS refund for input services. The SC has held that input services are not entitled for refund. My alternative argument, highlighting the anomaly created by the formula has been dealt with exhaustively by the SC, which observed, “In making such an assumption the formula tilts the balance in favour of the revenue by reducing the refund granted. We are equally cognizant of the fact that the proposed solution, that is prescribing an order of utilisation of the ITC accumulated on input services and inputs, may tilt the balance entirely in favour of the assesses”. In the end, the SC has directed the GST Council to take note of this and do the needful.
[9/13, 15:27] Sekarreporter: 1
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE/ORIGINAL JURISDICTION
Civil Appeal No 4810 of 2021
Union of India & Ors. ….Appellants
Versus
VKC Footsteps India Pvt Ltd. …. Respondents
With
Civil Appeal No 4809 of 2021
With
Civil Appeal No 4811 of 2021
With
Civil Appeal No 4807 of 2021
With
Civil Appeal No 4767 of 2021
With
Civil Appeal No 4804 of 2021
[9/13, 15:49] Sekarreporter: PART H
139
VKC Footsteps India Pvt. Ltd. (supra), the Gujarat High Court held that by
prescribing a formula in sub-Rule (5) of Rule 89 of the CGST Rules to execute
refund of unutilized ITC accumulated on account of input services, the delegate of
the legislature had acted contrary to the provisions of sub-Section (3) of Section 54
of the CGST Act which provides for a claim of refund of any unutilized ITC. The
Gujarat High Court noted the definition of ITC in Section 2(62) and held that Rule
89(5) by restricting the refund only to input goods had acted ultra vires Section
54(3). The Division Bench of the Madras High Court on the other hand while
delivering its judgment in Tvl. Transtonnelstory Afcons Joint Venture (supra)
declined to follow the view of the Gujarat High Court noting that the proviso to
Section 54(3) and, more significantly, its implications do not appear to have been
taken into consideration in VKC Footsteps India Pvt. Ltd. (supra) except for a brief
reference. Having considered this batch of appeals, and for the reasons which have
been adduced in this judgment, we affirm the view of the Madras High Court and
disapprove of the view of the Gujarat High Court. We accordingly order and direct
that:
(i) The appeals 55 filed by the Union of India against the judgment of the
Gujarat High Court dated 4 July 2020 in VKC Footsteps India Pvt. Ltd.
(supra) and connected cases are allowed and the judgment shall be set
aside;
55 SLP (Civil) No 14801 of 2020; SLP (Civil) No 16003 of 2020; SLP (Civil) No 1340 of 2021; SLP (Civil) No 16032 of
2020; SLP (Civil) No 677 of 2021; SLP (Civil) No 1868 of 2021; SLP (Civil) No 2951 of 2021; SLP (Civil) No 2456 of
2021; SLP (Civil) No 2973 of 2021
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140
(ii) The appeals56 filed by the assessees against the judgment of the Madras
High Court in Tvl. Transtonnelstroy Afcons Joint Venture (supra) and
connected cases dated 21 September 2020 shall stand dismissed. As a
consequence, the writ petition filed by the assessees shall also stand
dismissed. There shall no order as to costs; and
(iii) The observations in paragraphs 104 to 111 shall be considered by the
GST Council to enable it to take a considered view in accordance with law.
114 Pending application(s), if any, stand disposed of.
…….…………………………………………………….J.
[Dr Dhananjaya Y Chandrachud]
…….…………………………………………………….J.
[MR Shah]
New Delhi;
September 13, 2021.
56 SLP (Civil) No 589 of 2021; SLP (Civil) No 1418 of 2021; SLP (Civil) Nos 1742-1748 of 2021; SLP (Civil) Nos 1552-
1557 of 2021; SLP (Civil) Nos 8008-8009 of 2021