Facts of the Case

The Petitioner, Chamansab Hajaratsab Tamboli, a 75-year-old contractor holding GSTIN 29AFTPT9167M1Z0, filed a writ petition before the High Court of Karnataka, Dharwad Bench, challenging the constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61 of the Karnataka Goods and Services Tax Rules, 2017 — the provision prescribing the time limit for availing input tax credit — as violative of Articles 14, 19 and 300A of the Constitution. In the alternative, the Petitioner sought a reading down of Section 16(4) to treat the time limit as directory rather than mandatory, and also challenged Rule 61(5) of the CGST/SGST Rules (as amended by Notification No. 49/2019-Central Tax) and a specific notice dated 26.12.2021 issued by the Assistant Commissioner of Commercial Taxes. The writ was entertained solely on account of the constitutional challenge; absent such challenge, the Petitioner would have had to pursue the statutory appellate remedy.

Issues Involved

  1. Whether Section 16(4) of the CGST/SGST Act, 2017 and Rule 61(5) of the CGST/SGST Rules, 2017 were unconstitutional as being arbitrary, discriminatory and violative of Articles 14, 19 and 300A.
  2. Whether, absent the constitutional challenge, the Petitioner was obliged to pursue the statutory appellate remedy against the impugned notice and any consequential order.

Petitioner's Arguments

  • Section 16(4) of the CGST/SGST Act, 2017, prescribing a time limit for availing input tax credit, was illegal, unreasonable, arbitrary and discriminatory, and liable to be struck down.
  • In the alternative, the time limit under Section 16(4) ought to be read down as procedural and directory rather than mandatory.
  • Rule 61(5) of the CGST/SGST Rules, as introduced by Notification No. 49/2019-Central Tax, was similarly discriminatory and unconstitutional.
  • At the hearing, the Petitioner's counsel elected not to press the constitutional challenge and the alternative reading-down prayer, placing this on record.

Respondent's Arguments

  • The constitutional validity of Section 16(4) of the CGST/SGST Act read with Rule 61(5) had already been upheld in Thirumalakonda Plywoods v. Assistant Commissioner (Andhra Pradesh High Court) and Gobinda Construction v. Union of India (Patna High Court).
  • Similar time-limit provisions under the Tamil Nadu VAT Act had been 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.
  • Given this settled position, the challenge to constitutional validity ought to be rejected.

Court Order/Findings

  • Since the Petitioner did not press the challenge to the constitutional validity of Section 16(4) and the alternative reading-down prayer, the Court held that it need not examine the constitutional validity of the provisions.
  • The Court held that once the constitutional challenge was excluded, the Petitioner was required to approach the appellate authority under the CGST/KGST Act in respect of the impugned order and to respond to the show cause notice through the statutory process, rather than continue before the writ court.
  • The writ petition was disposed of without expressing anything on the merits of the underlying order or show cause notice, with liberty granted to the Petitioner to avail the statutory remedy.
  • The Court directed that the time spent in prosecuting the writ petition be excluded while computing limitation for filing an appeal or responding to the notice.

Important Clarification

Where a taxpayer withdraws a constitutional challenge to Section 16(4) of the CGST Act, the writ court will not independently examine the provision's validity and will instead relegate the taxpayer to the statutory appellate remedy, while excluding the time spent in the writ proceedings from the limitation period.

Sections Involved

  • Section 16(4) of the Central Goods and Services Tax Act, 2017 — time limit for availing input tax credit.
  • Rule 61(5) of the Central Goods and Services Tax Rules, 2017 — introduced by Notification No. 49/2019-Central Tax.
  • Articles 14, 19 and 300A of the Constitution of India, 1950 — grounds of constitutional challenge.

Decision – In Favour of

This is a thin order that does not decide the case in favour of either side on merits. The constitutional challenge was not pressed and left undecided, and the Petitioner was simply relegated to the statutory appellate remedy — a procedural, not substantive, outcome.

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. 102607 of 2022 (T-RES)
  • CNR: Not available (Neutral Citation: 2023:KHC-D:13417)
  • Coram: Hon'ble Mr. Justice Anant Ramanath Hegde
  • Decision Date: 17 November 2023
  • Disposal Nature: Disposed of; constitutional challenge not pressed, liberty to pursue statutory remedy

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