Facts of the Case

The petitioner, Shri Prabhayya Basayya Dandavatimath, proprietor of M/s Adishakti Electricals, Gadag (GSTIN 29AJQPD7649R1Z1), moved 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/CGST Rules, 2017 and Notification No.49/2019-Central Tax, insofar as they impose a time limit for availing input tax credit. He also sought to quash Order-in-Original No.20230557TC00008182E7/418 dated 01.05.2023 passed by the Assistant Commissioner of Central Taxes, GST, Hubballi, and a related letter dated 04.05.2023 issued by the Superintendent, Central Tax, Gadag. As with companion matters before the same Bench, the petition 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 corresponding Rules are ultra vires Articles 14, 19 and 300A of the Constitution.
  2. Whether the petitioner, having not pressed the constitutional challenge, should be relegated to the statutory appellate remedy against the Order-in-Original and the impugned letter.

Petitioner's Arguments

  • The time limit under Section 16(4) read with Rule 61(5) is arbitrary and discriminatory and should either be struck down or read down as directory rather than mandatory.
  • The Order-in-Original dated 01.05.2023 and the letter dated 04.05.2023 were unreasonable, arbitrary, oppressive and violative of Articles 14, 19, 265 and 300A.
  • Given the position taken by the respondents 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 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).
  • Analogous 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 to be rejected.

Court Order/Findings

  • As 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 provisions at all.
  • Once those prayers were excluded, the residual grievance concerned the validity of the impugned Order-in-Original and letter, for which the petitioner had to approach the appellate authority under the CGST/KGST Act and respond through the process provided by law.
  • The writ petition was disposed of without expressing anything on the merits of the impugned order, 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 in the face of settled High Court and Supreme Court authority on comparable time-limit provisions, will not be examined independently by the writ court — the taxpayer is left to the statutory appeal mechanism.
  • Exclusion of the writ-pendency period from limitation is a standard protective direction that should be relied upon when subsequently filing an appeal or reply.

Sections Involved

  • Section 16(4), CGST Act 2017 — time limit for availing input tax credit for a financial year.
  • Rule 61(5), CGST/KGST Rules 2017 — procedural rule tied to furnishing of returns and availment of credit.
  • Articles 14, 19, 265 and 300A, Constitution of India — grounds of challenge invoked against the Order-in-Original and the underlying provisions.

Decision – In Favour of

Disposed of without any finding on merits; the constitutional challenge was withdrawn in light of adverse precedent, making this a neutral disposal rather than a win for either side — the petitioner may still contest the Order-in-Original before the appellate authority, 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.103814 of 2023 (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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