- Judgment Overview: The Sikkim High Court ruled in favor of SICPA India Pvt. Ltd., allowing the refund of unutilized GST Input Tax Credit (ITC) upon closure of business, despite such situations not being explicitly listed under Section 54(3) of the CGST Act, 2017.
- Legal Interpretation: The Court highlighted that Section 49(6) permits refunds of balances in the Electronic Credit Ledger, and noted that there is no express prohibition against refunds in cases of business closure. This interpretation emphasizes preventing unjust retention of tax by the government.
- Broader Implications: While the ruling sets a significant precedent favoring taxpayers, its immediate applicability is limited to Sikkim. The Revenue may challenge the decision in the Supreme Court, potentially leading to legislative amendments to clarify ITC refund policies related to business closures. Taxpayers are advised to prepare documentation for pending claims and consider strategic options for ITC utilization.
Source Darda Advisors
