9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 1226 - HC - GSTInput Tax Credit (ITC) - Constitutional Validity of Section 16(4) of the APGST Act and CGST Act, 2017 - imposition of time limit for claiming Input Tax Credit (ITC) - acceptance of Form GSTR-3B returns of March 2020 filed on 27.11.2020 by the petitioner with a late fee - non-service of SCN - Principles of Natural Justice - HELD THAT - On a careful scrutiny, Section 16 of the APGST Act, 2017 prescribes the eligibility and conditions for a GST assessee to claim credit of Input Tax which was charged on any supply of goods or services or both which were used or intended to be used in the course of furtherance of his business. Precisely while Section 16 sub-section (2) prescribes the eligibility criteria which is sine qua non for claiming ITC, subsection (3) and (4) impose conditions or limitation for claiming ITC - It should be noted Section 16 of CGST Act, 2017 is in pari materia with Section 16 of APGST Act, 2017 with minor differences which are not much relevant in the present context. Hence this section needs no much elaboration. When analyzed, Section 16(2) shall not appear to be a provision which allows input tax credit, rather ITC enabling provision is Section 16(1). On the other hand, Section 16(2) restricts the credit which is otherwise allowed to only such cases where conditions prescribed in it are satisfied. Therefore, Section 16(2) in terms only overrides the provision which enables the ITC i.e., Section 16(1). This is evident from the manner in which Section 16(2) is couched. The non obstante clause in Section 16(2) is followed by a negative sentence no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless . This negative sentence pellucidly tells that unless the conditions mentioned in Section 16(2) are satisfied, no credit will be eligible. This stipulation manifests that Section 16(2) is not an enabling provision but a restricting provision. What it restricts is the eligibility which was otherwise given U/s 16(1). It should be noted, when a non obstante clause is a mere restricting provision, an interpretation that the other restricting provisions will not have effect or that the restricting provision will restrict other restricting provisions cannot be accepted for the reason that there is no contradiction between the restricting clause followed by non obstante and other restricting provisions - in substance Section 16(1) is an enabling clause for ITC; 16(2) subjects such entitlement to certain conditions; Section 16(3) and (4) further restrict the entitlement given U/s 16(1). That being the scheme of the provision, it is out of context to contend that one of the restricting provisions overrides other two restrictions. The issue can be looked into otherwise also. If really the legislature has no intention to impose time limitation for availing ITC, there was no necessity to insert a specific provision U/s 16(4) and to further intend to override it through Section 16(2) which is a futile exercise. In Willowood Chemicals Pvt Ltd. v. Union of India 2018 (10) TMI 261 - GUJARAT HIGH COURT before Gujarat High Court, inter alia the rule 117 of CGST Rules which prescribed the time limit for making declaration of available tax credits as on 30.06.2017 was challenged as ultra vires to the Constitution and it was contended such time limit should be read as directory and not mandatory. It is clear that ITC being a concession/benefit/rebate, the legislature is within its competency to impose certain conditions, including time prescription for availing such right and the same cannot be challenged on the ground of violation of Constitutional provisions. As rightly argued by learned Advocate General, the operative spheres of those Articles is different from that of Section 16. In order to establish legislative arbitrariness, it must be proved that the action was not reasonable or done capriciously or at pleasure, non rational, not done or acting according to reason or judgment but depending on the will alone. Then only it can be held to have violated Article 14 of the Constitution. Non-service of SCN - HELD THAT - A perusal of impugned Assessment Order dated 14.02.2022 passed by the 1st respondent shows that the present contentions that the notice was not issued in proper form and that no opportunity was granted for hearing etc., which were taken in objections 1 to 10 of the reply by the petitioners were vividly discussed and rejected by the 1st respondent. Hence there are no force in the present contentions. Petition dismissed.
Issues Involved:
1. Constitutionality of Section 16(4) of APGST Act and CGST Act, 2017. 2. Prevalence of Section 16(2) over Section 16(4) of APGST/CGST Act, 2017. 3. Effect of late fee payment on the validity of ITC claims. 4. Validity of summary order issued without proper notice and opportunity for hearing. Summary: Issue 1: Constitutionality of Section 16(4) of APGST Act and CGST Act, 2017 The petitioner argued that Section 16(4) of the APGST Act and CGST Act, 2017, which imposes a time limit for claiming Input Tax Credit (ITC), violates Articles 14, 19(1)(g), and 300-A of the Constitution of India. The court found that ITC is a concession, not a statutory or constitutional right, and imposing conditions, including time limits, does not violate constitutional provisions. The court cited several precedents, including Jayam and Co. v. Assistant Commissioner and ALD Automotive Pvt. Ltd. v. Commercial Tax Officer, to support the view that ITC is a benefit subject to legislative conditions. Issue 2: Prevalence of Section 16(2) over Section 16(4) of APGST/CGST Act, 2017 The petitioner contended that Section 16(2), which starts with a non obstante clause, should override Section 16(4). The court clarified that Section 16(2) is a restricting provision that sets eligibility criteria for ITC and does not enable ITC claims. Section 16(4) imposes a time limit for claiming ITC, and both provisions operate independently without contradiction. The court held that the non obstante clause in Section 16(2) does not override the time limit in Section 16(4). Issue 3: Effect of late fee payment on the validity of ITC claims The petitioner argued that the acceptance of Form GSTR-3B returns with a late fee should exonerate the delay in claiming ITC. The court rejected this argument, stating that the conditions in Sections 16(2) and 16(4) are mutually different and operate independently. The payment of a late fee is for admitting the returns for verification of taxable turnover, not for considering ITC claims. Issue 4: Validity of summary order issued without proper notice and opportunity for hearing The petitioner claimed that the summary order was issued without proper notice and sufficient opportunity for hearing. The court found that the objections raised by the petitioner were discussed and rejected in the impugned assessment order. The court concluded that the proper procedure was followed, and the contentions lacked merit. Conclusion: 1. The time limit for claiming ITC under Section 16(4) of APGST/CGST Act, 2017, is constitutional and does not violate Articles 14, 19(1)(g), and 300-A of the Constitution of India. 2. Section 16(2) does not override Section 16(4); both provisions operate independently. 3. Acceptance of Form GSTR-3B returns with a late fee does not validate ITC claims made beyond the period specified in Section 16(4). 4. The summary order issued by the 1st respondent followed proper procedure, and the petitioner's contentions were without merit. The writ petition was dismissed with no costs.
|
