Facts of the Case

The petitioner, Rajesab Moulasab Santi, a contractor registered under GSTIN 29AXGPS4000H1Z1, approached the Karnataka High Court, Dharwad Bench, challenging the constitutional validity of Section 16(4) of the CGST/KGST Act, 2017 read with Rule 61(5) of the KGST Rules, 2017, and Notification No.49/2019-Central Tax dated 09.10.2019, insofar as they prescribe a time limit for availing input tax credit. He also sought to quash a show-cause notice bearing No.ACCT/LGSTO-430/BGV/21-22/B-629 dated 29.12.2021 issued by the Assistant Commissioner of Commercial Taxes, LGSTO-430, Jamakhandi. The petition was entertained by the Court solely because the constitutional validity of the provisions was under challenge; otherwise, the petitioner had an alternate statutory remedy.

Issues Involved

  1. Whether Section 16(4) of the CGST/KGST Act, 2017, and Rule 61(5) of the KGST Rules, 2017, prescribing a time limit for availing input tax credit, are unconstitutional as violative of Articles 14, 19 and 300A.
  2. Whether, once the constitutional challenge is not pressed, the petitioner must be relegated to the statutory appellate remedy in respect of the impugned notice.

Petitioner's Arguments

  • Section 16(4) and Rule 61(5) are illegal, arbitrary and discriminatory, and the time limit for availing input tax credit should be read down as merely procedural and directory.
  • The impugned show-cause notice dated 29.12.2021 was unreasonable, arbitrary, oppressive and premeditated.
  • In light of the respondents' submissions on binding precedent, learned counsel for the petitioner ultimately did not press the constitutional challenge or the alternative prayer to read down Section 16(4).

Respondent's Arguments

  • The constitutional validity of Section 16(4) CGST/SGST Act, 2017 read with Rule 61(5) had already been upheld in Thirumalakonda Plywoods v. Assistant Commissioner (Andhra Pradesh High Court, W.P.No.24235/2022) and Gobinda Construction v. Union of India (Patna High Court, CWJC No.9108/2021).
  • Similar time-limit provisions under the Tamil Nadu VAT Act had been upheld by the Supreme Court in Jayam and Company v. Assistant Commissioner, (2016) 15 SCC 125, and ALD Automotive Pvt. Ltd. v. Commercial Tax Officer, (2019) 13 SCC 225.
  • The challenge to constitutional validity deserved to be rejected in light of this settled position.

Court Order/Findings

  • Since the petitioner's counsel 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 the constitutional validity of the provisions at all.
  • With those prayers excluded, the only remaining question was the validity of the impugned notice/order, for which the petitioner had to approach the appellate authority under the CGST/KGST Act, and file a reply to the show-cause notice as provided under law.
  • The writ petition was disposed of without expressing anything on the merits of the order or notice, with liberty to the petitioner to avail the statutory remedy.
  • The time spent in prosecuting the writ petition was directed to be excluded while computing limitation for filing an appeal or responding to the notice.

Important Clarification

  • Where a constitutional challenge to Section 16(4) is not pressed in view of coordinate-bench and Supreme Court precedent upholding analogous time-limit provisions, the writ court will not independently examine validity, and the taxpayer is left to the ordinary appellate/reply route.
  • Time consumed in a writ petition of this kind is excludable while computing the limitation for a subsequent statutory appeal or reply to a show-cause notice — a protection taxpayers should expressly invoke when approaching the appellate authority.

Sections Involved

  • Section 16(4), CGST Act 2017 — prescribes the time limit within which input tax credit for a financial year must be availed.
  • Rule 61(5), KGST Rules 2017 — procedural rule linked to the furnishing of returns and availment of credit.
  • Articles 14, 19 and 300A, Constitution of India — grounds of challenge invoked (equality, freedom to carry on trade, and property rights).

Decision – In Favour of

Disposed of without any finding on merits; the constitutional challenge was not pressed in light of adverse precedent, and the matter is neither a win for the assessee nor the department — the petitioner retains liberty to contest the underlying notice before the appellate authority, with the litigation period excluded from limitation.

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.102887 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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