Facts of the Case

The petitioner, M/s. RSN Hydro Solutions (GSTIN 29AAJFR4490IZO), a partnership firm at Gadag, Karnataka, filed a writ petition under Articles 226 and 227 challenging the constitutional validity of Section 16(4) of the CGST Act/KGST Act, 2017 and Rule 61(5) of the CGST/KGST Rules, 2017, seeking a declaration that the time limit for availing Input Tax Credit is procedural and directory rather than mandatory. The petitioner also challenged a show-cause notice dated 04.02.2022 issued by the Superintendent (Prev.), Central GST & Central Excise, Belagavi. The petition was entertained by the Dharwad Bench on the limited ground that the vires of the provisions were under challenge.

Issues Involved

  1. Whether Section 16(4) of the CGST/KGST Act, restricting the time limit for availing Input Tax Credit, is unconstitutional and violative of Articles 14, 19 and 300A.
  2. Whether the writ petition survives once the constitutional challenge is not pressed by the petitioner.

Petitioner's Arguments

  • Section 16(4) is arbitrary and discriminatory, and the time limit for availing ITC should be read as directory rather than mandatory.
  • Rule 61(5) of the CGST/KGST Rules and the related notification were also assailed as unconstitutional and violative of Article 14/19.
  • At the hearing, counsel for the petitioner submitted that the constitutional challenge would not be pressed, and this submission was placed on record.

Respondent's Arguments

  • The validity of Section 16(4) read with Rule 61(5) already stands upheld by the Andhra Pradesh High Court in Thirumalakonda Plywoods vs Assistant Commissioner and by the Patna High Court in Gobinda Construction vs Union of India.
  • Similar time-limit provisions under the Tamil Nadu VAT Act have been upheld by the Supreme Court in Jayam and Company vs Assistant Commissioner (2016) 15 SCC 125 and ALD Automotive Pvt. Ltd. vs Commercial Tax Officer (2019) 13 SCC 225.
  • The constitutional challenge therefore deserved outright rejection.

Court Order / Findings

  • Since the petitioner did not press the challenge to constitutional validity or the alternative prayer to read down Section 16(4), the Court held it need not examine that question.
  • Once the constitutional prayers were excluded, the petitioner was left only with a challenge to the impugned order and notice, for which the appropriate course was to approach the statutory appellate authority or respond to the show-cause notice.
  • The writ petition was disposed of without expressing anything on the merits of the impugned order/notice, with liberty to the petitioner to avail statutory remedies under the CGST/KGST Act.
  • The time spent in prosecuting the writ petition was directed to be excluded while computing limitation for any appeal or reply to the notice.

Important Clarification

  • Where a taxpayer withdraws or does not press a constitutional challenge to Section 16(4) of the CGST Act, courts will not independently examine the vires of the provision and will relegate the taxpayer to the ordinary statutory remedy, while granting exclusion of the time spent in the writ proceedings for limitation purposes.

Sections Involved

  • Section 16(4), CGST Act 2017 / KGST Act 2017 — time limit for availing input tax credit.
  • Rule 61(5), CGST Rules 2017 — procedure relating to furnishing of returns affecting ITC claims.
  • Articles 14, 19 and 300A, Constitution of India — grounds of the (withdrawn) constitutional challenge.

Decision – In Favour of

Disposed of without adjudication on merits — an effectively neutral outcome, with the petitioner given liberty to pursue statutory appellate/reply remedies against the department's order and show-cause notice, and the limitation period protected.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: WP No.101821 of 2022 (T-RES)
  • CNR: Not available
  • Coram: Justice Anant Ramanath Hegde
  • Decision Date: 17-11-2023
  • Disposal Nature: Disposed of, no merits expressed; liberty to avail remedy under CGST/KGST Act

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