Facts of the Case

M/S APG Automation Private Limited, a Belagavi-based company holding GSTIN 29AAKCA2416M1ZF, filed a writ petition before the Dharwad Bench of the Karnataka High Court challenging the constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61(5) of the KGST Rules and Notification No.49/2019-Central Tax, which prescribe the time limit for availing input tax credit. The petitioner also challenged an adjudication order bearing No.183068269 dated 25.08.2022 passed by the Assistant Commissioner of Commercial Taxes (Audit-7), Belagavi, as arbitrary, oppressive and violative of Articles 14, 19 and 300A of the Constitution.

Issues Involved

  1. Whether Section 16(4) of the CGST/SGST Act, 2017 and Rule 61(5) of the KGST Rules were unconstitutional, or alternatively required to be read down as directory rather than mandatory.
  2. Whether the impugned adjudication order and show cause notices could be sustained once the constitutional challenge was not pressed.
  3. Whether the petitioner should be relegated to the statutory appellate remedy under the CGST/KGST Act.

Petitioner's Arguments

  • Initially, the petitioner sought a declaration that Section 16(4) of the CGST/KGST Act and Rule 61(5) of the KGST Rules were illegal, unreasonable, arbitrary and discriminatory, violating Articles 14, 19 and 300A, or alternatively that the time limit for availing input tax credit be read down as merely procedural and directory.
  • At the hearing, however, counsel for the petitioner did not press the constitutional challenge or the alternative reading-down prayer, effectively conceding that these points were not being pursued.

Respondent's Arguments

  • The Department jointly submitted that the constitutional validity of Section 16(4) of the CGST/SGST Act read with Rule 61(5) had already been upheld in Thirumalakonda Plywoods vs. The Assistant Commissioner (Andhra Pradesh High Court) and Gobinda Construction vs. Union of India and Others (Patna High Court).
  • Reliance was also placed on the Supreme Court's rulings in Jayam and Company vs. Assistant Commissioner and ALD Automotive Private Limited vs. Commercial Tax Officer, upholding similar time-limit provisions under the Tamil Nadu VAT Act, to argue that the challenge deserved rejection.

Court Order/Findings

  • Since the constitutional challenge and the alternative prayer to read down Section 16(4) were expressly not pressed by the petitioner, the Court found it unnecessary to examine the constitutional validity of the provisions.
  • The writ petition was disposed of without expressing any opinion on the merits of the impugned adjudication order or the show cause notices, leaving the petitioner at liberty to avail the statutory appellate remedy under the CGST Act and KGST Act.
  • The Court directed that, should the petitioner pursue such statutory remedy, the time spent in prosecuting the writ petition would be excluded while computing any limitation period for filing an appeal or responding to notices.

Important Clarification

Where a constitutional challenge to Section 16(4) of the CGST/SGST Act (the ITC time-limit provision) is not pressed at the hearing — often because coordinate High Courts and the Supreme Court have already upheld similar time-limit provisions — courts will decline to examine the merits of the underlying adjudication order and instead relegate the assessee to the statutory appellate remedy, while protecting the assessee by excluding the time spent in the writ proceeding from the limitation period for filing that appeal.

Sections Involved

  • Section 16(4), CGST/SGST Act, 2017 — prescribes the time limit within which input tax credit may be availed for a financial year/tax period.
  • Rule 61(5), KGST Rules, 2017 — procedural rule connected with furnishing of returns relevant to the ITC time limit dispute.
  • Section 107, CGST Act, 2017 — provides the statutory appellate remedy to which the petitioner was relegated.

Decision – In Favour of

This is a thin, procedural disposal: the writ petition was disposed of with liberty to appeal, and nothing was expressed on the merits of either the constitutional challenge (not pressed) or the underlying adjudication order, so it cannot be characterised as a clean win for the Assessee or the Department.

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.: Writ Petition No. 104859 of 2022 (T-RES)
  • CNR: 2023:KHC-D:13445
  • Coram: Hon'ble Mr. Justice Anant Ramanath Hegde
  • Decision Date: 17-11-2023
  • Disposal Nature: Disposed of without expressing opinion on merits; liberty to appeal

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