On 18.07.2023, Hon’ble Andhra Pradesh High Court Bench at Amaravati, in its decision in case titled as “Thirumalakonda Plywoods v. Assistant Commissioner- State Tax, 2023 SCC OnLine AP 1476”, ruled in favour of Constitutional Validity of provision prescribing time limit for claiming ITC u/s 16(4) of CGST Act.
Facts of the Case
Order dated 14.03.2022 was passed against Petitioner under Section 74 of CGST Act raising demand of tax of Rs. 4,78,626/- along with interest and penalty on the ground that Petitioner had availed ITC in contravention of Section 16(4) and thus the same was irregular credit liable to be recovered from Petitioner.
The Petitioner had filed the return for month of March even after the date prescribed for filing the return relating to the month of September of succeeding year.
Petitioner’s Case
The Petitioner in the above case, had filed a writ petition in High Court of Andhra Pradesh, praying for a writ of mandamus declaring that Section 16(4) of CGST Act is violative of Article 14, 19(1)(g) and Section 300-A of Constitution of India.
It was contended that Input Tax Credit is a statutory right which an assessee is entitled to claim and placing stumbling blocks by way of imposing time limit u/s 16(4) of CGST Act from claiming such right tantamount to violation of Article 14, 19(1)(g), 300A of Constitution of India.
Respondent’s Arguments
The Advocate General appearing on behalf of Respondents submitted that Petitioner can claim ITC subject to fulfilment of conditions laid in Section 16 of CGST Act, and that Section 16(4) is clear to the effect that any claim made through GSTR-3B return filed after prescribed date shall not be valid.
Findings of Hon’ble Court
1. Input Tax Credit is a mere concession/ rebate/ benefit and is not a statutory or constitutional right and therefore imposing conditions including time limitation for availing the said concession will not amount to violation of constitution or any statute.
2. It has been held by Hon’ble Supreme Court in Jayam and Co. v. Assistant Commissioner with reference to Section 19 of Tamil Nadu VAT Act, that ITC is a form of concession provided by the Legislature, and this concession is available on certain conditions mentioned in the Section.
In view of the above, the Hon’ble AP High Court held as under:
The Time limit prescribed for claiming ITC u/s 16(4) of CGST/ APGST Act, 2017 is not violative of Articles 14, 19, 300A of Constitution of India.
Our View
The above decision has been given by the Hon’ble Andhra Pradesh High Court in challenge to constitutional validity of Section 16(4) of CGST Act. Section 16(4) of the CGST Act (As it stood at that time) provides that a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under Section 39 for the month of September following the end of Financial Year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Now, vide Finance Act, 2022, the due date has been extended to thirtieth day of November. For Compliance purposes, it is imperative for registered person to do a reconciliation of Input Invoices and ITC auto-populated in GSTR-2B and GSTR-3B in order to ascertain if:
1. ITC on input invoices is appearing in GSTR-2B, and credit is availed within time.
If ITC is not appearing in GSTR-2B and consequently, ITC is not availed, Registered Person must communicate its grievance to the vendor from whom goods/ services are received.
The Registered Person may consider raising a debit note to the vendor for recovery of tax amount.
On the legal issue of prescription of time limit for availing ITC, in our view, the said prescription of time limit is an unreasonable restriction on the statutory vested right on an Assessee to avail Input Tax Credit. In the case of CCE, Pune v. Dai ichi Karkaria Ltd., (1999) 7 SCC 448, Hon’ble Supreme Court has held that Credit under MODVAT scheme was “as good as tax paid”. The aforesaid Judgment of Andhra Pradesh High Court has binding effect on the jurisdictional authorities and Assessees situtated within State of Andhra Pradesh. Writ Petitions filed in High Court of Delhi and High Court of Allahabad challenging vires of Section 16(4) of CGST Act, are currently pending, and hence it will be useful to await the outcome of the said cases.
