Facts of the Case

The petitioner, Channaveeragouda, a contractor based at Belagavi, Karnataka, filed a writ petition before the Dharwad Bench of the High Court of Karnataka under Articles 226/227 challenging the constitutional validity of Section 16(4) of the Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017 read with Rule 61(5) of the Karnataka Goods and Services Tax Rules, 2017, and Notification No.49/2019-Central Tax, as violative of Articles 14, 19 and 300A of the Constitution for imposing a time limit on availing input tax credit. In the alternative, the petitioner sought a reading down of Section 16(4) as merely procedural/directory, and also challenged a specific demand order dated 08.09.2022 (No.ACCT/LGSTO-390/US 73(9)/10/B) passed by the Assistant Commissioner of Commercial Taxes, LGSTO-390, Belagavi. Respondents included the State of Karnataka, the Union of India, the GST Council and the Principal Chief Commissioner of Central Tax. Coram: Justice Anant Ramanath Hegde; order dated 17 November 2023.

Issues Involved

  1. Whether Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61(5) of the KGST Rules, 2017 (prescribing a time limit for availing input tax credit) is unconstitutional as violative of Articles 14, 19 and 300A.
  2. Whether, once the constitutional challenge was not pressed, the petitioner could still obtain examination of the impugned demand order and show-cause notices in the same writ petition.

Petitioner's Arguments

  • Section 16(4) of the CGST/SGST Act and the corresponding KGST Rule impose an arbitrary and discriminatory time limit on claiming input tax credit, a vested/accrued right, and should be struck down or, alternatively, read down as merely directory.
  • In light of the respondents' reliance on binding precedent upholding similar provisions, the petitioner chose not to press the constitutional challenge, reserving the right to pursue the statutory appellate remedy against the underlying demand order.

Respondent's Arguments

  • The constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61(5) already stood upheld by the Andhra Pradesh High Court in Thirumalakonda Plywoods v. The Assistant Commissioner (W.P.No.24235/2022) and the Patna High Court in Gobinda Construction v. Union of India (CWJC No.9108/2021).
  • Similar time-limit provisions under the Tamil Nadu Value Added Tax Act had already been upheld by the Supreme Court in Jayam and Company v. Assistant Commissioner (2016) 15 SCC 125 and ALD Automotive Private Limited v. Commercial Tax Officer (2019) 13 SCC 225, and the same reasoning applied squarely to Section 16(4).

Court Order/Findings

  • Since the petitioner's counsel did not press the challenge to the constitutional validity of Section 16(4), nor the alternative prayer to read it down, the Court held it need not examine the constitutional validity of the provision.
  • The Court directed that the petitioner approach the appellate authority under the CGST Act and KGST Act in respect of the impugned demand order, and issue a reply or take appropriate measures in respect of the impugned show-cause notices.
  • The petition was disposed of without expressing anything on the merits of the underlying orders or show-cause notices.
  • Liberty reserved: time spent prosecuting the writ petition was directed to be excluded while computing limitation for any appeal or response to the impugned notices.

Important Clarification

  • The constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61(5) of the KGST Rules (the time limit for availing input tax credit) has been upheld by the Andhra Pradesh High Court (Thirumalakonda Plywoods) and the Patna High Court (Gobinda Construction), following the Supreme Court's reasoning on analogous VAT time-limit provisions.
  • Where a petitioner elects not to press a constitutional challenge given adverse precedent, the writ court will typically dispose of the matter without a merits finding and grant exclusion of the litigation period for computing limitation on the statutory remedy.

Sections Involved

  • Section 16(4), Central/Karnataka Goods and Services Tax Act, 2017 — prescribes the time limit for availing input tax credit, the provision under constitutional challenge (not pressed).
  • Rule 61(5), Karnataka Goods and Services Tax Rules, 2017 — procedural rule linked to the time limit under Section 16(4).
  • Section 73, Central Goods and Services Tax Act, 2017 — provision under which the impugned demand order was passed.
  • Articles 14, 19 and 300A, Constitution of India — constitutional provisions invoked (challenge not pressed).

Decision – In Favour of

Disposed of with directions/liberty — essentially in favour of the Department on the constitutional issue (unpressed, and consistent with precedent upholding Section 16(4)), while preserving the Assessee's right to pursue the statutory appeal without prejudice to limitation.

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.104429 of 2022 (T-RES)
  • CNR: Not available on record
  • Coram: Justice Anant Ramanath Hegde
  • Decision Date: 17.11.2023
  • Disposal Nature: Disposed of; constitutional challenge not pressed, liberty to avail appellate remedy

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