Facts of the Case

Ravishankar S/o Sushilkumar Kalyanshetti, a contractor aged 48 years residing at Jamkhandi, Bagalkot district, registered under GSTIN 29AJRPK9426E1ZP, filed Writ Petition No.102923 of 2022 (T-RES) before the High Court of Karnataka, Dharwad Bench. The petitioner challenged the constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61 of the KGST Rules, 2017, and, in the alternative, sought that the ITC time limit be read down as procedural and directory. The petitioner also sought to quash notice No. ACCT/LGSTO-430/BGV/168/21-22/B-629 dated 26.12.2021 issued by the Assistant Commissioner of Commercial Taxes, LGSTO-430, Jamkhandi. The matter was heard on 17.11.2023, the same day and by the same Judge (Justice Anant Ramanath Hegde) who decided a materially similar petition filed by M/s. RSN Hydro Solutions.

Issues Involved

  1. Whether Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61 of the KGST Rules is unconstitutional as being illegal, arbitrary and discriminatory.
  2. Whether Rule 61(5) of the CGST/SGST Rules, 2017 (Notification No.49/2019-Central Tax) is liable to be struck down.
  3. Whether the notice dated 26.12.2021 issued to the petitioner could be sustained.
  4. Whether, once the constitutional challenge is not pressed, the writ court should still examine the validity of the notice.

Petitioner's Arguments

  • Originally contended that Section 16(4) and Rule 61(5) were illegal, unreasonable, arbitrary and discriminatory, violating Articles 14, 19 and 300A of the Constitution.
  • Alternatively sought a reading down of the ITC time limit under Section 16(4) as merely procedural and directory rather than mandatory.
  • At the hearing, counsel chose not to press either the constitutional challenge or the alternative reading-down prayer, given the position taken by other High Courts, reserving the statutory remedy against the notice instead.

Respondent's Arguments

  • Jointly submitted that the constitutional validity of Section 16(4) of the CGST/SGST Act read with Rule 61(5) already stood upheld in Thirumalakonda Plywoods v. The Assistant Commissioner, W.P. No.24235/2022 (Andhra Pradesh High Court), and in Gobinda Construction v. Union of India and Others, Civil Writ Jurisdiction Case No.9108/2021 (Patna High Court).
  • Relied on the Supreme Court's rulings in Jayam and Company v. Assistant Commissioner and Another, (2016) 15 SCC 125, and ALD Automotive Private Limited v. Commercial Tax Officer (CT) and Others, (2019) 13 SCC 225, upholding analogous time-limit provisions under the Tamil Nadu VAT Act.
  • Urged that the challenge to the constitutional validity of the provision be rejected since it had already been upheld by two High Courts following binding Supreme Court precedent.

Court Order/Findings

  • Since the petitioner's counsel placed on record that neither the constitutional challenge nor the alternative reading-down prayer was being pressed, the Court held it need not examine the constitutionality of the provisions.
  • The Court held that once the constitutional prayers stand excluded, the petitioner must be relegated to the appellate authority under the CGST Act and KGST Act to challenge the impugned notice, without the writ court expressing any view on merits.
  • The writ petition was disposed of without expressing anything on the merits of the notice, with liberty to avail the statutory appellate remedy and with the time spent in the writ petition excluded from limitation.
  • Consequently, I.A. No.1/2022 filed in the petition was held not to survive and was dismissed.

Important Clarification

  • This is a companion order to the Dharwad Bench's disposal of M/s. RSN Hydro Solutions' writ petition on the same day, confirming that the Court is treating the constitutionality of Section 16(4)'s ITC time limit as settled in line with the Andhra Pradesh High Court (Thirumalakonda Plywoods) and the Patna High Court (Gobinda Construction).
  • Where a petitioner withdraws a constitutional challenge, any interlocutory application tied to that relief (such as a stay application) will also be treated as not surviving and dismissed as a consequence.

Sections Involved

  • Section 16(4), CGST Act/SGST Act, 2017 – prescribes the time limit within which a registered person may avail Input Tax Credit for a financial year.
  • Rule 61, KGST Rules, 2017 (including Rule 61(5), Notification No.49/2019-Central Tax) – procedural rule relating to furnishing of returns, linked to the ITC time-limit dispute.
  • Articles 14, 19 and 300A, Constitution of India – equality, freedom of trade, and property rights grounds originally invoked to challenge Section 16(4).

Decision – In Favour of

As with the companion RSN Hydro Solutions order, this disposal is procedural rather than a ruling on merits: the constitutional challenge was withdrawn, not rejected, and the petitioner was left free to pursue the statutory appellate remedy against the notice, with the litigation period excluded from limitation. The outcome favours neither side substantively, though the Department's position on Section 16(4)'s validity went unchallenged and stands undisturbed.

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.102923 of 2022 (T-RES)
  • CNR: 2023:KHC-D:13422
  • Coram: Hon'ble Mr Justice Anant Ramanath Hegde
  • Decision Date: 17 November 2023
  • Disposal Nature: Disposed of – constitutional challenge to Section 16(4) CGST/SGST Act and Rule 61(5) CGST Rules not pressed; petitioner relegated to statutory appellate remedy under CGST/KGST Act

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