In the present case, Gobinda Construction filed Form GSTR-1 on time but filed Form GSTR-3B
for February and March 2019 after the last date prescribed for availing the input tax credit. The
revenue department issued a show cause notice to disallow input tax Credit (ITC) for those
months, alleging that the petitioner had wrongly availed ITC.
The adjudicating authority ordered against the petitioner, holding them liable to pay tax and
interest for availing ITC in violation of Section 16(4) of the CGST Act. The appellate authority
upheld this decision.
The petitioner then filed a writ petition before the Honourable Patna High Court, arguing that
Section 16(4) of the CGST Act, which denies ITC for delayed filing of returns, is unconstitutional.
Petitioner contended that provision is confiscatory in nature and that ITC is a vested right under
Article 300A of the Constitution of India, which cannot be easily taken away due to a delayed
return.
The Court cited a Honourable Supreme Court’s judgment (Jayam and Company vs. Assistant
Commissioner & Anr.) to support its decision. It held that ITC is a concession granted by statute,
and its conditions must be strictly followed. The court found that Section 16(4) of the CGST Act
is constitutionally valid and does not violate Article 19(1)(g) or Article 300A of the Constitution.
It also emphasized the presumption of constitutional validity for legislation, placing the burden
on the challenger to prove otherwise.
The Court upheld the validity of Section 16(4) of the CGST Act, allowing the Revenue
Department to disallow ITC for delayed returns, and dismissed the Petitioner’s claims.
| SW Point of View: From a legal perspective, the adjudicating authority and appellate authority order against the petitioner, citing Section 16(4) of the CGST Act. The petitioner challenged this in Patna High Court, arguing that Section 16(4) is unconstitutional and violates their rights. However, the court upheld Section 16(4)’s validity, emphasizing strict compliance with statutory conditions for ITC. The decision highlights the burden on challengers to prove unconstitutionality and its significant implications for businesses. It’s advisable for late filers to file returns promptly to avoid ITC denial under Section 16(4). |
Aagam Jain, Article Assistant – Indirect Tax, SW India
