In Brief
The Supreme Court resolved a conflict between two high courts on whether Rule 89(5) of the CGST Rules unlawfully restricts refund of accumulated unused input tax credit (ITC) to goods only, excluding services. The Court held that Section 54(3) of the CGST Act limits refund to ITC accumulated because input goods are taxed higher than output supplies—not extending to input services. Rule 89(5) correctly reflects this restriction. While the Court acknowledged the formula has inequities, it refused to invalidate fiscal rules merely for being imperfect. The Court affirmed the Madras High Court and allowed the Union's appeal against the Gujarat High Court, rejecting arguments that distinct treatment of goods versus services violates constitutional equality or GST's principle of tax neutrality.", <parameter name="summary_100">
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