2019 (12) TMI 159 - HC - GST

Maintainability of application - refund of input services - Rule 89(5) of the CGST Rules - substantive challenge to the Order-in-Original or not - HELD THAT - The challenge in the main Petition is to Rule 89(5) of the CGST Rules, which restricts refund of input services. Grant of any interim relief, as prayed for, would virtually amount to directing the Respondents to act contrary to the provisions of Rule 89(5) of the CGST Rules. Normally, unless a case, much stronger than a mere prima facie case is made out, there is no question of grant of stay to any legislation or the Rules, having statutory force. The Applicants are seeking a mandatory relief, though the relief is styled as seeking stay on the impugned orders. There is really no case made out for grant of such a relief in mandatory terms, at the interim stage. Application rejected.

Summary

Issues:
1. Stay on the operation of Order-in-Original dated 10th January, 2019 and Order-in-Original dated 19th August, 2019 made by the Assistant Commissioner of Central Goods and Service Tax.
2. Challenge to Rule 89(5) of the CGST Rules regarding refund of input services.
3. Seeking interim relief contrary to statutory provisions.
4. Request for mandatory relief at the interim stage.

Analysis:

1. The applicant sought a stay on the operation of two orders issued by the Assistant Commissioner of Central Goods and Service Tax. The High Court noted that there was no substantive challenge to the second order dated 19th August, 2019. Since there was no challenge to this order, the court could not entertain the application seeking interim relief. The first order dated 10th January, 2019 was the subject of the main Petition challenging Rule 89(5) of the CGST Rules.

2. The main Petition challenged Rule 89(5) of the CGST Rules, which limits the refund of input services. The court had already issued a rule in the main Petition and granted liberty to the Petitioner to apply for interim relief if necessary. Granting the interim relief requested would essentially require the Respondents to act against the provisions of Rule 89(5) of the CGST Rules. The court emphasized that a strong case must be made beyond a prima facie case to grant a stay on legislation or rules with statutory force.

3. The relief sought by the Applicant effectively demanded a refund of an amount already held by the Respondents. Although styled as a request for a stay on the impugned orders, the nature of the relief was mandatory. The court found no justification for granting such mandatory relief at the interim stage, especially when it would go against statutory provisions.

4. Consequently, the High Court rejected the Civil Application for a stay, and no costs were awarded. The court also noted that the main Petition was scheduled for final disposal on a specific date, and accordingly, set a date for the final disposal of the main Petition in the following year.