A division bench of the Chattisgarh High Court held that the provision outlined in Section 16(4) of the Central Goods and Services Tax Act, 2017 does not infringe upon either Article 14 or Articles 19(1)(g) & 300A of the Constitution, thus upholding the constitutional validity of the same.
The petitioner is a proprietorship firm engaged in the trading of Oils and allied products thereof, registered under the provisions of the CGST Act as well as the Chhattisgarh Goods and Services Tax Act, 2017.
The petitioner, M/s Jain Brothers regularly procures goods and utilizes specific services related to the business. For the financial year 2018-19, the petitioner submitted the return under Section 39 of the CGST Act in Form GSTR-3B for the month of March 2019 on 13-11-2019. The return was specifically filed for the designated period, and the Input Tax Credit (ITC) claimed in the return for March 2019 was considered eligible ITC for the designated period as per the provisions of Section 16(2).
Subsequently, the petitioner received a demand letter dated 6-2-2020 from respondent, requesting payment of ₹ 9,43,919/-. The demand was based on the allegation that the availed Input Tax Credit, as mentioned earlier, was in violation of Section 16(4) of the Central Goods and Services Tax Act, coupled with interest under Section 50.
The petitioner initiated the present writ petition, challenging the constitutional validity of Section 16(4) of the CGST Act. Furthermore, the petitioner questions the proceedings initiated for the recovery of ₹ 9,43,920/-, along with interest and penalties, contending that such recovery under Section 16(4) violates Articles 14, 19(1)(g) & 300A of the Constitution of India.
The respondent, the Union Government contended that the grant of input tax credit under Section 16 of the CGST Act is a concession or relaxation, and no one can claim it as a matter of vested right.
The respondent argued that it is entirely within the legislature’s purview to make provisions and restrict benefits, concessions, or relaxations either to a specific class of persons or, even if extended to all, to limit the term or period during which the concession can be availed. It is contended by the petitioner that Section 16(4) of the CGST Act is a constitutionally valid provision and an integral part of the statute.
Neelabh Dubey, (the amicus curiae appointed by the court in the case) asserts that Section 16(4) imposes a condition that input tax credit cannot be claimed based on invoices or debit notes for the supply of goods or services after November 30th, thereby placing a limitation on the credit availing process.
He points out that the petitioner cannot invoke Article 19(1)(g) of the Constitution, as this provision is applicable only to citizens and not to juristic persons like the petitioner in this case. He also contended that challenging the act of the legislature on the grounds of Article 300A of the Constitution is also not available to the petitioner unless it can be demonstrated that the legislature lacks legislative competence or infringes on Part XIII of the Constitution of India.
The bench held that the petitioner has not presented a compelling case to challenge the constitutional validity of Section 16(4) of the Central Goods and Services Tax Act, as it stands as a constitutionally sound piece of legislation. The bench asserted that the provision outlined in Section 16(4) of the Central Goods and Services Tax Act does not infringe upon either Article 14 or Articles 19(1)(g) & 300A of the Constitution.
The bench Chattisgarh High Court Division Bench consisted of Justices Radhakrishnan K Agarwal and Sanjay K Agarwal.
The petitioner was represented by Palash Soni and the revenue was represented by Deputy Solicitor General of India Ramakant Mishra and Anmol Sharma.
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