Facts of the Case

M/s. Prabhulingeswar Engineering Works, Jamakhandi, represented by its proprietor Shri Prabhu Mali (GSTIN 29BJVPM7785B1ZE), filed Writ Petition No. 101882 of 2023 (T-RES) before the Dharwad Bench of the High Court of Karnataka, challenging the constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61(5) of the Karnataka GST Rules, 2017, and Notification No. 49/2019-Central Tax, as well as a specific order in Form GST DRC-07 dated 31.01.2023 raising a demand. Respondents included the Assistant Commissioner of Commercial Tax, the State of Karnataka, the Union of India, the GST Council, and the Principal Chief Commissioner of Central Tax, Bengaluru. The matter was heard and decided on 17.11.2023 by Justice Anant Ramanath Hegde, with respondents' counsel pointing out that Section 16(4)'s validity had already been upheld by the Andhra Pradesh High Court in Thirumalakonda Plywoods and the Patna High Court in Gobinda Construction, following the Supreme Court's rulings on analogous VAT time-limit provisions.

Issues Involved

  1. Whether Section 16(4) of the CGST/SGST Act, 2017, prescribing a time limit for availing input tax credit, is unconstitutional as violative of Articles 14, 19 and 300A.
  2. Whether Rule 61(5) of the Karnataka GST Rules, 2017 and Notification No. 49/2019-Central Tax are similarly liable to be struck down or read down as directory.
  3. Once the constitutional challenge was not pressed, whether the petitioner could still assail the impugned DRC-07 order and notice in writ jurisdiction, or must pursue the statutory appellate remedy.

Petitioner's Arguments

  • The petitioner had originally pleaded that the time limit for availing input tax credit under Section 16(4) was illegal, unreasonable, arbitrary and discriminatory, seeking either to strike it down or read it down as procedural and directory.
  • It was also pleaded that Rule 61(5) of the KGST Rules and the connected Central Tax notification were similarly discriminatory and violative of Articles 14 and 19.
  • At the hearing, counsel for the petitioner submitted that the prayer challenging Section 16(4)'s validity, and the alternative read-down prayer, would not be pressed, narrowing the case to the specific impugned order and notice.

Respondent's Arguments

  • Respondents' counsel jointly submitted that Section 16(4) read with Rule 61(5) already stood upheld by the Andhra Pradesh High Court in Thirumalakonda Plywoods and the Patna High Court in Gobinda Construction.
  • They relied on the Supreme Court's decisions in Jayam and Company and ALD Automotive Pvt. Ltd., upholding similar time-limit provisions under the Tamil Nadu VAT Act, to argue the challenge to Section 16(4) ought to be rejected.

Court Order/Findings

  • Since the petitioner did not press the prayer challenging Section 16(4)'s constitutional validity, or the alternative read-down prayer, the Court held that it need not examine the provision's validity at all.
  • Once the constitutional prayers were excluded, the Court held that the petitioner had to approach the appellate authority under the CGST Act and the KGST Act to challenge the impugned order and notices, rather than have the writ court adjudicate those questions.
  • The writ petition was disposed of without expressing anything on the merits, with liberty to avail the statutory appellate remedy, and with the time spent prosecuting the writ excluded while computing limitation for any such appeal.

Important Clarification

Where a taxpayer's constitutional challenge to Section 16(4) of the CGST Act (the time limit for availing input tax credit) is not pressed at the hearing — typically because other High Courts have already upheld the provision — the writ court will decline to examine the provision's validity and will instead relegate the taxpayer to the ordinary statutory appeal against the underlying order, excluding the time spent in the writ petition from the limitation period for that appeal.

Sections Involved

  • Section 16(4), Central Goods and Services Tax Act, 2017 – prescribes the outer time limit within which a registered person can avail input tax credit for a financial year.
  • Rule 61(5), Karnataka Goods and Services Tax Rules, 2017 – deals with furnishing returns in Form GSTR-3B, linked to the Section 16(4) time limit for claiming credit.
  • Section 107, Central Goods and Services Tax Act, 2017 – provides the statutory appeal against orders such as the impugned DRC-07 demand, to which the petitioner was relegated.

Decision – In Favour of

This is a disposal without any opinion on the merits. The constitutional challenge to Section 16(4) was not adjudicated because it was not pressed, and the challenge to the specific demand order was left entirely open for the appellate authority. Honestly framed, this is disposed of with directions and without opinion on merits — a neutral/procedural outcome, not a clean win for either the Assessee or the Department, though the exclusion of limitation time is a modest practical benefit to the petitioner in pursuing its appeal.

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. 101882 of 2023 (T-RES)
  • CNR: Not available on record
  • Coram: Justice Anant Ramanath Hegde
  • Decision Date: 17 November 2023
  • Disposal Nature: Disposed of without expressing opinion on merits; liberty to pursue statutory remedy

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