The High Court of Andhra Pradesh has held that the time limit imposed on the claim of Input Tax Credit (ITC) under Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017 is not in violation of constitutional provisions.
The ruling reaffirmed the constitutionality of the time restriction on ITC claim and preserved the integrity of Articles 14, 19(1)(g) and 300A of the Constitution of India.
The case revolved around the constitutionality of Section 16(4) of the Andhra Pradesh Goods and Services Tax (APGST) Act and CGST Act, which sets a time limit for businesses to claim ITC for a particular Financial Year (FY).
The petitioner assessee, Thirumalakonda Plywoods carries out hardware and plywood business in Andhra Pradesh.
The petitioner, through its sole proprietor Kondalaiah Sunduru, sought a writ of mandamus before the High Court of Andhra Pradesh.
The petitioner represented by Sri Rama Krishna Kumar Potturi argued that this provision infringes their constitutional rights, particularly the right to equality under Article 14, the right to carry on any trade or business under Article 19(1)(g) and the right not to be deprived of property save by authority of law under Article 300A of the Constitution.
The High Court recognised that the crux of the case lay in whether the time limit for ITC claims infringed upon constitutional provisions.
The bench noted that ITC is a concession granted by the legislature and not an absolute legal right.
The bench emphasised that imposing conditions and time limitations for availing such concessions is well within the legislative authority and does not violate the Articles of the Constitution. The decision was based on precedents that established ITC as a concession subject to specific conditions.
The court also highlights that fiscal legislation enjoys a certain level of latitude, and the burden of proving a clear violation of Constitutional principles lies with those challenging the legislation.
In this case, the court found that the petitioner failed to demonstrate that the time limit for ITC claims was unconstitutional or violated their rights under Articles 14, 19(1)(g) and 300A of the Constitution.
The bench reaffirmed the authority of the legislature to impose conditions and restrictions on availing tax concessions and underscored the importance of adhering to statutory timelines clarifying the difference between statutory concessions and constitutional rights.
In conclusion, the division bench comprising Justice U. Durga Prasad Rao and Justice T. Mallikarjuna Rao dismissed the writ petition and upheld the constitutionality of the time limit prescribed for claiming ITC under Section 16(4) of the CGST Act citing that the same is not violative of Articles 14, 19(1)(g) and 300-A of the Constitution of India.
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