Raj HC issues notice to Centre, state on Plea against a GST provision

The Rajasthan High Court Tuesday sought stands of the Union and state governments on a plea seeking repeal of one of the provisions of their Goods and Services Tax on the grounds of being "unconstitutional".

A bench of justices Sangeet Lodha and Dinesh Mehta sought the two governments' stands within four weeks on a plea by Lakhani Metal and Castings Pvt Ltd of Bikaner challenging the provision that empowers the government to deny the refund of "unutilized input tax credit" to a company without assigning any reason for the action.

The firm challenged clause (ii) of the proviso of Sub Section 3 of Section 54 of the Central GST Act, 2017 and Rajasthan GST Act, 2017.

Appearing for the petitioner, counsel Ramit Mehta argued before the court that the section 54 provision negates another provision of the law, Section 49(6) of the GST Act, 2017 that grants statutory right for obtaining refund after adjustment of tax, interest, fees and penalty.