Delhi HC issues notice to Centre in plea challenging power to amend CGST Rules retrospectively

The Delhi High Court today issued notice to the Central government in a writ petition challenging Section 164(3) of the Central Goods and Services Tax (CGST) Act, 2017..Section 164(3) gives power to the Central government to enact Rules under the Act with retrospective effect..The petitioner, N Ranga Rao & Sons Private Limited, alleges that the provision is violative of Articles 14, 19(1)(g), 265 and 300A of the Constitution of India..The matter was listed for hearing before a Division Bench of Justices Sanjiv Khanna and Chander Shekhar..The Court today granted six weeks’ time to the Centre to file its reply to the petition..The petition filed through Rahul Unnikrishnan and KJ John & Co, contends that,. “164(3) gives a wide and unbridled power to the Government” as “it does not lay down any policy, principle or standard subject to which the Government may make retrospective rules, especially in the context of violation of vested rights by such rules”..This “excessive delegation of power” is “manifestly arbitrary”, the petition claims..It also challenges the constitutional validity of the newly amended Rule 89(5) of the CGST Rules, 2017..The amended Rule 89(5) of the CGST Rules now confines the definition of “Net Input Tax Credit” to input tax credit availed on inputs alone, thereby excluding the input tax credit availed on input services while calculating the refund amount..Further, another Notification No. 26/2018- CT dated June 13, 2018, is also under scrutiny. The said notification had amended Rule 89(5) of the CGST Rules retrospectively, with effect from July 1, 2017..It is the petitioner’s grievance that GST is an indirect levy and the products are priced “keeping in mind the then existing rules on refund of input tax credit”. By retrospectively amending Rule 89(5), the petitioner claims, he is being “denied a chance to recover the taxes from the customers”.. The petitioner was represented by Senior Advocate Arvind Datar..The matter will next be heard on January 8.