‘CGST Act Does Not Permit Tax Retention Without Legal Authority’: Sikkim HC Allows Refund of Rs. 4.37 crores Unutilized ITC on Closure of Business

The Sikkim High Court has ruled that the CGST Act does not permit tax retention without legal authority, allowing a refund of ₹4 crores unutilized ITC on business closure. This landmark judgment reinforces the principle that tax authorities cannot withhold Input Tax Credit (ITC) without proper legal backing, especially when a business ceases operations. The court's decision ensures that businesses can recover their accumulated and unutilized ITC upon closure, preventing unjust enrichment of the state and providing crucial financial relief during the winding-up process.