Shri Naresh Thacker, the learned counsel for the petitioner, submits that the petitioner challenges the vires of Rule 89 (5) of the Central Goods and Services Tax (CGST) Rules, 2017 on the ground that it runs contrary to the provisions of Section 54 (3) of the Central Goods and Services Tax (CGST) Act, 2017.

The cause of action to challenge the rules has arisen because the application of the petitioner for refund of ₹ 39,28,339/, which is the amount of Input Service Credit, has been rejected on the basis of the provisions of sub-rule 5 of Rule 89 read with the Notification No.5/2017, dated 28.06.2017.  

Our attention is invited to the provisions of Section 54 (3) of the Central Goods and Services Tax Act, 2017 which entitles the petitioner to claim refund of unutilized input tax credit which is defined under Section 2 (63) and the input tax is defined under Section 2 (62) of the Central Goods and Services Tax (CGST) Act, 2017 to mean the tax charged on any supply of goods or services or both made to him.

According to the learned counsel for the petitioner, sub-rule (5) of Rule 89 of the said Rules gives the formula for computation of refund of input tax credit and explanation (a) therein excludes input tax service credit from the definition of Net ITC, though it is shown under the turn over of inverted rated supply of goods and services therein.

Issue notice for final disposal of the matter, to the respondents, returnable on 09.10.2019.

Shri U.M. Aurangabadkar, the learned ASGI, waives service of notice for the respondent no.1 and Shri S.N. Bhattad, the learned counsel, waives service of notice for the respondent nos.4 and 5