Facts of the Case

The petitioner, Ravishankar S/o. Sushilkumar Kalyanshetti, a contractor registered under GSTIN 29AJRPK9426E1ZP, filed this writ petition before the Karnataka High Court, Dharwad Bench, challenging the constitutional validity of Section 16(4) of the Central Goods and Services Tax Act, 2017 and the corresponding Karnataka GST Act provision, read with Rule 61(5) of the Karnataka GST Rules, 2017 and Notification No.49/2019-Central Tax, insofar as they prescribed a time limit for availing input tax credit. In the alternative, the petitioner sought to have the time limit read down as directory rather than mandatory. The petition also challenged a notice dated 26.12.2021 issued by the Assistant Commissioner of Commercial Taxes, LGSTO-430, Jamkhandi. The writ petition had been entertained solely because it raised a constitutional challenge; absent that, the petitioner would have had to pursue the statutory remedy under the CGST/KGST Act.

Issues Involved

  1. Whether Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61(5) of the KGST Rules, prescribing a time limit for availing input tax credit, is unconstitutional or liable to be read down as merely directory.
  2. Whether, upon the petitioner not pressing the constitutional challenge, the writ petition could still be used to examine the validity of the impugned notice.

Petitioner's Arguments

  • Section 16(4) of the CGST/SGST Act and Rule 61(5) of the KGST Rules, along with Notification No.49/2019-Central Tax, were illegal, arbitrary and discriminatory, violating Articles 14, 19 and 300A of the Constitution.
  • In the alternative, the time limit for availing input tax credit should be read down as procedural and directory rather than mandatory.
  • The impugned notice dated 26.12.2021 issued by the Assistant Commissioner was also unreasonable, arbitrary and excessive.
  • At the hearing, counsel for the petitioner chose not to press the constitutional challenge or the alternative prayer to read down Section 16(4).

Respondent's Arguments

  • Counsel for the respondents jointly submitted that the constitutional validity of Section 16(4) of the CGST/SGST Act read with Rule 61(5) of the KGST Rules stood upheld by the Andhra Pradesh High Court in Thirumalakonda Plywoods vs. The Assistant Commissioner and by the Patna High Court in Gobinda Construction vs. Union of India.
  • They further relied on the Supreme Court's rulings upholding a similarly structured time limit under the Tamil Nadu VAT Act in Jayam and Company vs. Assistant Commissioner (2016) 15 SCC 125 and ALD Automotive Private Limited vs. Commercial Tax Officer (2019) 13 SCC 225, arguing the challenge to Section 16(4) should be rejected.

Court Order/Findings

  • Since the constitutional challenge and the alternative prayer to read down Section 16(4) were not pressed by the petitioner, the Court held it need not examine the constitutional validity of the provision or the plea to read it down.
  • Once the constitutional prayers were excluded, the Court held that the validity of the impugned order/notice had to be examined by the appellate authority under the CGST/KGST Act, and directed the petitioner to avail that statutory remedy.
  • The writ petition was disposed of without expressing anything on the merits of the impugned notice, with liberty granted to the petitioner to pursue the statutory remedy.
  • The time spent in prosecuting the writ petition was directed to be excluded while computing limitation for any appeal or response to the impugned notice.

Important Clarification

  • Where a petitioner does not press a constitutional challenge to Section 16(4) of the CGST Act (which multiple High Courts, including Andhra Pradesh and Patna, have upheld as valid), the writ court will ordinarily relegate the taxpayer to the statutory appellate remedy rather than examine the merits of the impugned notice itself.
  • Time spent pursuing such a writ petition is liable to be excluded while computing the limitation period for filing an appeal or responding to the impugned notice, protecting the taxpayer's statutory remedy.

Sections Involved

  • Section 16(4), CGST Act 2017 / KGST Act 2017 — time limit for availing input tax credit.
  • Rule 61(5), KGST Rules 2017 — procedural rule tied to the Section 16(4) time limit, per Notification No.49/2019-Central Tax.
  • Article 226/227, Constitution of India — writ jurisdiction invoked and ultimately declined on the notice challenge.

Decision – In Favour of

Disposed of with directions; largely in favour of the Department on the constitutional question, which was left unadjudicated as not pressed, in a field where other High Courts have upheld Section 16(4); the petitioner retains the statutory appellate remedy against the impugned notice, with limitation protection for the time spent in the writ petition.

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.102923 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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