Coriolis Corp Newsletter July 2025

Dear All,

 

On 10th June, 2025, High Court of Sikkim, Gangtok has delivered a path breaking Judgement on the issue of eligibility of refund of un-utilized ITC on closure of business. The details of the Judgement have been covered in the case law section of this newsletter under the heading “A business discontinuing operations is entitled to a refund its unutilized ITC”

 

Closure of business is not recognised under the GST law as an eligible ground for refund, and section 49(6) of the CGST Act does not independently provide for refund but is dependent on the conditions stipulated under section 54 of the CGST Act.

 

The Sikkim HC has observed that although, Section 54(3) of the CGST Act deals only with two circumstances where refunds can be made, however the statute also does not provide for retention of tax without the authority of law. 

 

No doubt, the ratio of the HC ruling is in favour of the taxpayers, however, it would be of interest to watch as to what would be the reaction of CBIC on Sikkim HC ruling.  The CBIC may move to Apex Court against Sikkim HC Order or may initiate action to amend CGST Act and the Rules suitably.