Facts of the Case

The petitioner, Sri Narasima Nayaka, a contractor from Koppal District, Karnataka, holding GSTIN 29AESPN3796A1ZZ, filed a writ petition under Articles 226 and 227 of the Constitution challenging Annexure-A order No.01/2018-19 dated 03.02.2020 passed by the Assistant Commissioner of Commercial Taxes, Local Goods and Services Tax Office, Gangavathi (respondent no.1), denying his claim of input tax credit for assessment year 2018-19, and seeking to lift the blocking of his account on the department's portal. The petition also challenged the constitutional validity of Section 16(4) of the CGST Act, 2017 and the corresponding KGST Act provision read with Rule 61(5) of the KGST Rules, which prescribe the time limit for availing ITC. The matter was heard by the Dharwad Bench on 17 November 2023.

Issues Involved

  1. Whether Section 16(4) of the CGST/KGST Act, 2017 and Rule 61(5) of the KGST Rules, prescribing a time limit for claiming input tax credit, are unconstitutional.
  2. Whether the petitioner could pursue the challenge to the order denying ITC directly in writ jurisdiction, given the availability of a statutory appellate remedy.

Petitioner's Arguments

  • Sought to have Section 16(4) of the CGST/KGST Act and Rule 61(5) of the KGST Rules declared unconstitutional as violative of Articles 14, 19 and 300A, or alternatively read down as directory rather than mandatory in respect of the ITC time limit.
  • At the hearing, chose not to press the constitutional challenge or the alternative read-down prayer, and placed this submission on record.

Respondent's Arguments

  • Section 16(4) of the CGST/SGST Act read with Rule 61(5) of the KGST Rules has already been upheld as constitutional in Thirumalakonda Plywoods v. The Assistant Commissioner (Andhra Pradesh High Court) and Gobinda Construction v. Union of India (Patna High Court).
  • Relied on the Supreme Court's decisions in Jayam and Company v. Assistant Commissioner, (2016) 15 SCC 125, and ALD Automotive Pvt. Ltd. v. Commercial Tax Officer, (2019) 13 SCC 225, upholding a similar time-limit provision under the Tamil Nadu VAT Act.
  • Submitted that, in light of these precedents, the constitutional challenge deserved to be rejected.

Court Order/Findings

  • Since the constitutional challenge and the alternative read-down prayer were not pressed, the Court did not examine the validity of Section 16(4) or Rule 61(5).
  • The writ petition was disposed of without expressing any opinion on the merits of the impugned order or the ITC denial, with liberty to the petitioner to avail the statutory appellate remedy under the CGST/KGST Act.
  • Time spent in prosecuting the writ petition was directed to be excluded while computing limitation for any such statutory appeal.

Important Clarification

  • Where a petitioner does not press a constitutional challenge to Section 16(4) of the CGST Act (the ITC time-limit provision), the High Court relegates the assessee to the statutory appellate remedy rather than adjudicating the underlying ITC denial itself.
  • Time spent pursuing such a writ petition is excluded while computing the limitation period for filing the statutory appeal — a protective direction assessees can rely on in similar situations.
  • The order records, without independently deciding, that other High Courts have upheld Section 16(4)/Rule 61(5) as constitutional, relying on Supreme Court precedent on analogous VAT time-limit provisions.

Sections Involved

  • Section 16(4), CGST Act, 2017 — prescribes the time limit within which input tax credit must be availed.
  • Rule 61(5), KGST Rules, 2017 — procedural rule tied to the ITC time-limit framework.
  • Articles 226 and 227, Constitution of India — writ and superintendence jurisdiction invoked.

Decision – In Favour of

Disposed of with directions, without a finding for either side on merits — the constitutional challenge was withdrawn and the petitioner was left at liberty to pursue the statutory appellate remedy against the ITC denial.

Related Case Laws

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

Case Details

  • Court: Karnataka High Court (Dharwad Bench)
  • Case No.: WRIT PETITION NO. 101025 OF 2021 (T-RES)
  • CNR: 2023:KHC-D:13399
  • Coram: Hon'ble Mr. Justice Anant Ramanath Hegde
  • Decision Date: 17 November 2023
  • Disposal Nature: Disposed of

Link to Download the Order

Download the full judgment (PDF)

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.