Neeraj Kaul, PDS Legal win interim relief in challenge to 44A of CGST Rules

Last week, the Delhi High Court directed the central government to not take any coercive steps in furtherance of a notification issued under the new CGST regime, which denied credit accrued to Gold Dore Bar importers on account of additional customs duty or Countervailing Duty (CVD) paid at the time of importation..The petitioners were represented by Senior Advocate Neeraj Kishan Kaul, who was briefed by PDS Legal’s Partner Tarun Gulati, Senior Principal Associate Kishore Kunal, and Associate Prashant Tahiliani..The petitioners challenged the constitutional validity of the impugned notification issued on August 17, whereby the government required reversal of 5/6th of the CENVAT (Central Value Added Tax) credit which had already accrued to the Petitioner..It was contended that Section 140 of the Central Tax Act categorically provided for the credit of the entire CVD paid on inputs held in stock and inputs contained in semi-finished or finished goods held in stock, on fulfilment of certain conditions..It was argued that Rule 44A – inserted in the Central Goods and Services Rules through the impugned notification – denies the credit accrued and is ultra vires Section 140 of the CGST Act as well as the rule making powers under Section 164..It was further argued that the impugned notification is grossly discriminatory and unreasonable and has imposed the restrictions which are applicable only to imported gold dore bars..“Impugned Notification has singled out only imported gold dore bars resulting in imposition of a higher burden of tax on these goods as compared to other imported goods as well as compared to any similar domestic goods.”.While granting interim relief to the petitioners, the Bench of Justices S Muralidhar and Pratibha M Singh observed,.“The Court is of the view that the Petitioners have made out a prima facie case for grant of interim relief in their favour. Further, the balance of convenience is in their favour for grant of interim relief.”.The matter will next be taken up on September 25..Read the order: