Facts of the Case

The petitioner, Suresh Shanmukh Maradi, a contractor registered under GSTIN 29ASBPM3741R1Z4, filed a writ petition before 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, which 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 28.12.2021 issued by the Assistant Commissioner of Commercial Taxes, LGSTO-430, Jamkhandi. The petition, like companion matters before the same Bench, was entertained principally because a constitutional challenge was raised.

Issues Involved

  1. Whether Section 16(4) of the CGST/KGST Act, 2017, and Rule 61(5) of the KGST Rules, 2017, are unconstitutional and violative of Articles 14, 19 and 300A.
  2. Whether the petitioner, having not pressed the constitutional challenge, must be relegated to the statutory remedy in respect of the impugned show-cause notice.

Petitioner's Arguments

  • The time limit under Section 16(4) read with Rule 61(5) is illegal, arbitrary and discriminatory, and should be struck down or read down as directory rather than mandatory.
  • The show-cause notice dated 28.12.2021 was unreasonable, arbitrary, oppressive and premeditated.
  • In light of the respondents' reliance on binding precedent, counsel for the petitioner did not press the constitutional challenge or the alternative prayer to read down Section 16(4).

Respondent's Arguments

  • 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).
  • Comparable time-limit provisions under the Tamil Nadu VAT Act were 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 constitutional challenge, therefore, deserved rejection.

Court Order/Findings

  • Since the constitutional challenge and the alternative prayer to read down Section 16(4) were not pressed, the Court held it need not examine the constitutional validity of the impugned provisions.
  • With those prayers excluded, the residual grievance was confined to the validity of the impugned notice, 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 by law.
  • The writ petition was disposed of without expressing anything on the merits of the notice, with liberty reserved to pursue the statutory remedy.
  • Time spent in the writ proceedings was directed to be excluded while computing limitation for the appeal or reply.

Important Clarification

  • A challenge to Section 16(4)'s constitutionality, once not pressed given settled High Court and Supreme Court authority on comparable time-limit provisions, will not be examined independently by the writ court, and the taxpayer is left to reply to the notice and, if needed, the statutory appeal mechanism.
  • Exclusion of the writ-pendency period from limitation is a standard protective direction that should be relied upon when subsequently replying to the notice or filing an appeal.

Sections Involved

  • Section 16(4), CGST Act 2017 — time limit for availing input tax credit for a financial year.
  • Rule 61(5), KGST Rules 2017 — procedural rule linked to furnishing of returns and availment of credit.
  • Articles 14, 19 and 300A, Constitution of India — grounds of challenge invoked against the provisions and the notice.

Decision – In Favour of

Disposed of without any finding on merits; the constitutional challenge was not pressed in light of adverse precedent, making this a neutral disposal — the petitioner may still respond to the show-cause notice and pursue the appellate remedy, with the writ-pendency 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.102884 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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