Facts of the Case

The appellant, M/s. BBA Infrastructure Limited, filed an intra-court appeal against a Single Bench order dated 13.06.2023 declining interim relief in its writ petition (WPA 11339 of 2023), which challenged an Order-in-Appeal dated 04.01.2023 passed under Section 107 of the CGST/WBGST Act, 2017. The underlying dispute concerned denial of input tax credit of Rs. 28,64,780/- for the period November 2018 to March 2019, on the ground that the appellant's GSTR-3B returns for that period were filed on 20.10.2019, beyond the time limit fixed under Section 16(4) of the GST Act, which had expired on 20.10.2019 for that year. A show cause notice dated 28.10.2020 was issued; the second respondent passed an order dated 04.01.2021 demanding tax, penalty and interest; on non-payment, the department debited the amounts, with interest, from the appellant's CGST and SGST ledgers on 11.09.2021. The statutory appeal against this order was rejected on 04.01.2023. By consent, the Division Bench heard the appeal together with the writ petition itself and disposed of both by a common judgment.

Issues Involved

  1. Whether the non-obstante clause in Section 16(2) of the CGST/WBGST Act overrides the time limit for availing input tax credit prescribed in Section 16(4).
  2. Whether ITC is "taken" through entries in the books of account, independent of the time limit for filing returns under Section 39.
  3. Whether denial of ITC for GSTR-3B returns filed beyond the Section 16(4) deadline, along with the associated penalty, was legally sustainable.

Petitioner's Arguments

  • Section 16(2) is a non-obstante provision using the words "entitled to take credit," so entitlement arises independent of the timing of filing returns, and Section 16(1) contains no time limit linked to Section 16(4).
  • The non-obstante clause in Section 16(2) has an overriding effect that renders the time restriction in Section 16(4) meaningless, relying on Union of India v. Bharti Airtel Ltd. and GST Council minutes/notifications extending due dates and waiving late fees during the transition period.
  • Reliance was also placed on Indsur Global Ltd. v. Union of India regarding the hardship faced by assessees during the rollout of the GST regime.

Respondent's Arguments

  • A non-obstante clause must be read to give overriding effect only over genuinely contrary provisions, not to render a complementary provision like Section 16(4) otiose.
  • Section 16(2)(d) read with Section 16(4) shows entitlement to ITC arises only after filing of the return under Section 39, further qualified by the Section 16(4) time limit.
  • Relied on ALD Automotive Pvt. Ltd., Jayam and Company, TVS Motor Company, M.K. Kandaswami, Thirumalakonda Plywoods (AP HC), and Gobinda Construction (Patna HC) to argue ITC is a statutory concession that must be strictly availed within prescribed conditions, and that the appellant's admittedly belated, incorrect GSTR-3B filing justified both denial of credit and penalty.

Court Order/Findings

  • The Division Bench held that Section 16(1) is the enabling provision, while Section 16(2) is a restrictive, not an enabling, provision that does not override Section 16(4); the two provisions are complementary, with Section 16(4) operating as a further condition qualifying entitlement to ITC.
  • Following ALD Automotive, TVS Motor Company, and the Andhra Pradesh and Patna High Courts' rulings upholding pari materia provisions, the Court held ITC is a statutory concession available strictly on fulfilment of prescribed conditions, including the Section 16(4) time limit.
  • Finding no infirmity in the impugned orders, the intra-court appeal and the writ petition were both dismissed, with no costs.

Important Clarification

The non-obstante clause in Section 16(2) of the CGST Act only overrides provisions genuinely contrary to it; it does not dilute or override the time limit for availing input tax credit prescribed in Section 16(4), which operates as an independent, complementary condition restricting an otherwise available credit, so returns filed beyond the Section 16(4) deadline will result in valid denial of ITC.

Sections Involved

  • Section 16(1), CGST Act, 2017 - eligibility for input tax credit.
  • Section 16(2), CGST Act, 2017 - conditions for availing credit, framed as a non-obstante clause.
  • Section 16(4), CGST Act, 2017 - time limit for taking input tax credit.
  • Section 39, CGST Act, 2017 - furnishing of returns.

Decision – In Favour of

In favour of the Department. The Calcutta High Court upheld the denial of input tax credit and the associated penalty for GSTR-3B returns filed beyond the Section 16(4) time limit, dismissing both the intra-court appeal and the writ petition.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Judicature at Calcutta
  • Case No.: MAT No. 1099 of 2023 (I.A. No. CAN 1 of 2023)
  • CNR: Not available
  • Coram: Chief Justice T.S. Sivagnanam and Justice Hiranmay Bhattacharyya
  • Decision Date: 13 December 2023
  • Disposal Nature: Dismissed

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