2024 (9) TMI 1648 - HC - GST

Constitutional validity of section 16(4) of CGST Act/SGST Act 2017 - Petition seeking declaration of certain provisions as illegal and discriminatory - Blocking of credit balance - HELD THAT - In view of the amendment by inserting Section 16(5) to the CGST / KGST Act, the present petition deserves to be disposed of relegating the parties to the original authority to implement and give effect to the said provisions after providing sufficient and reasonable opportunity to the petitioner and hearing them and proceed further in accordance with law and by issuing certain directions in this regard. The parties are relegated to the stage of show cause notice at Annexure-C dated 13.02.2020 issued by the respondent(s) and the respondents are directed to give effect to and implement the amended provisions contained in Section 118 of The Finance (No.2) Act, 2024 relating to insertion of Section 16(5) to the CGST Act / KGST Act by providing sufficient and reasonable opportunity and hear the petitioner and proceed further in accordance with law within a period of one month from the date of receipt of a copy of this order. The petition is disposed off.

Summary

Issues:
Petition seeking declaration of certain provisions as illegal and discriminatory, challenge to show cause notice, blocking of credit balance, interpretation of time limit for input tax credit, and relief sought for refund claim.

Analysis:
The petitioner sought various reliefs, including challenging the legality of Section 16(4) of CGST Act/SGST Act 2017, requesting for a writ of declaration or direction to strike down the provision as violative of Article 14, 19, and 300A. Additionally, the petitioner sought relief in the form of reading down the said provision as procedural and directory. Furthermore, the petitioner challenged Rule 61(5) of CGST/SGST Rules 2017 and sought a writ of declaration or certiorari to strike down the provision as unreasonable and discriminatory. The petitioner also challenged a show cause notice dated 13.2.2020 as violative of Articles 14, 19, and 300A, requesting a writ of certiorari to quash the notice. Moreover, the petitioner challenged the provisions of Section 164(3) and Rule 86A of CGST/SGST Rules 2017, seeking declarations or certiorari to strike down these provisions as unreasonable and discriminatory.

During the proceedings, a new provision, Section 16(5), was inserted by "The Finance (No.2) Act, 2024," extending the time limit for availing input tax credit. The petitioner and respondents agreed that this provision applied to the petitioner and other assessees, extending the time for filing returns and availing input tax credit until 30.11.2021. The parties jointly submitted that the present petition should be disposed of accordingly, considering the insertion of Section 16(5) into the CGST Act.

The Court acknowledged the insertion of Section 16(5) into the CGST Act by "The Finance (No.2) Act, 2024," and decided to dispose of the petition, directing the parties to the original authority to implement and give effect to the amended provisions. The Court ordered the respondents to provide a reasonable opportunity to the petitioner, hear them, and proceed further in accordance with the law within a month. The Court quashed the impugned blocking of the Input Tax Credit (ITC) ledger of the petitioner and directed the respondents to unblock and release the credit balance immediately. The Court kept all other contentions and challenges to statutory provisions open, without expressing any opinion on them.