Satyam Ispat (North East) Limited vs. The Union Of INDIA And 4 Ors.
Original PDF →Facts
The petitioner, Satyam Ispat (North East) Limited, challenged the vires of Section 16(4) of the GST Act, 2017, and an Order-in-Original dated March 30, 2022, passed by the Assistant Commissioner, CGST & CX, Itanagar. The order demanded Input Tax Credit (ITC) of IGST, CGST, and SGST amounting to Rs. 1,64,43,484/- availed and utilized irregularly during January 2020 to March 2020. The demand included interest at 24% and a penalty of Rs. 16,44,348/-. The petitioner also challenged recovery notices dated August 5, 2022, and August 24, 2022. During the pendency of the writ petition, Section 16 of the CGST Act was amended with retrospective effect from July 1, 2017, by inserting Sub-Section (5).
Held
The Court held that the grievance raised by the petitioner has been redressed due to the insertion of Sub-Section (5) in Section 16 of the Central Goods and Services Tax Act, 2017, vide Gazette Notification dated August 16, 2024, with retrospective effect from July 1, 2017. The Court noted that the learned counsels for the respondents agreed with this position. Consequently, without adjudicating the impugned Order-in-Original and recovery notices on merit, the Court set them aside. The respondent authorities were directed to consider and pass an appropriate order taking into account the provision of Sub-Section (5) of Section 16 of the Central Goods and Services Tax Act, 2017. The writ petition was disposed of in terms of these observations and directions. The ratio decidendi is that legislative amendments, especially those with retrospective effect, can cure defects in prior orders and necessitate a reconsideration of demands based on the amended law.
Key Issues
1. Whether Section 16(4) of the Central Goods and Services Tax Act, 2017, is ultra vires the Constitution, considering its impact on the eligibility of Input Tax Credit (ITC)? (Petitioner's contention: The petitioner argued that Section 16(4) of the GST Act, 2017, was arbitrary and unconstitutional as it restricted the availment of ITC beyond the prescribed time limits, thereby causing undue hardship. The petitioner sought to challenge the vires of this provision. Revenue's contention: The revenue did not explicitly argue on the vires of Section 16(4) but agreed that the subsequent amendment redressed the petitioner's grievance. 2. Whether the impugned Order-in-Original dated March 30, 2022, and subsequent recovery notices are liable to be set aside in light of the amendment to Section 16 of the CGST Act, 2017, by inserting Sub-Section (5)? (Petitioner's contention: The petitioner argued that the insertion of Sub-Section (5) to Section 16 of the CGST Act, 2017, with retrospective effect, nullified the basis of the impugned order and recovery notices, and therefore, these should be set aside and the matter remanded. Revenue's contention: The revenue agreed that the insertion of Sub-Section (5) of Section 16 of the CGST Act, 2017, has redressed the grievance raised by the petitioner.)
Sections Cited
Section 16(4), Section 73(9), Section 20, Section 50(3), Section 16(5)
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER 16.09.2024 (Kardak Ete, J) Heard Dr. A. Saraf, learned Senior Advocate assisted by Ms. T. Y. Bhutia, learned counsel for the petitioners. Also heard Mr. M. Kato, learned DSGI appearing for the respondent No.1 and Mr. M. K. Boro, learned Standing Counsel, CGST & CX/respondent Nos. 2, 3 & 4. 2. By filing this writ petition, the petitioner has put to challenge the vires of Section 16(4) of the GST Act, 2017 and the Order-in-Original dated 30.03.2022, passed by the Assistant Commissioner, CGST & CX, Itanagar Division/respondent No. 3, whereby, the petitioner is directed to pay to the demand of Input Tax Credit of IGST, CGST and SGST amounting to Rs. 1,64,43,484/- availed and utilized irregularly during the period from January, 2020 to March, 2020, in terms of Sub-Section (9) of Section 73 of the CGST Act, 2017, read with Section 20 of the IGST, 2017, with interest at applicable rate i.e. 24% under Section 50(3) of the CGST Act, 2017 for a period from due date of payment to date of actual payment, with penalty amounting to Rs. 16,44,348/- which is equivalent to 10% of the tax due under Sub-Section (9) of Section 73 of the CGST Act, 2017 read with Section 20 of the IGST Act, 2017. The petitioner further has challenged the recovery notices dated 05.08.2022 and Page No.# 4/6 24.08.2022, whereby, the petitioner has been directed to submit the Challan of payment of the amount demanded vide order in original dated 30.03.2022. 3. During the pendency of the writ petition, vide Gazette Notification dated 16.08.2024, an amendment with Section of 16 of the Central Goods and Services Tax has been brought in with retrospective effect from 01.07.2017 by inserting Sub-Section (5) in Section 16 of the Central Goods and Services Tax Act, 2017. 4. Section 16(5) of the Central Goods and Services Tax Act, 2017 reads as under:
“(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed up to the thirtieth day of November, 2021.”
The learned counsels appearing for the respondents are in agreement that in view of the insertion of Sub-Section (5) in Section 16 of the Central Goods and Services Tax Act, 2017, the grievance raised by the petitioner has been redressed.
Dr. A. Saraf, learned Senior Advocate for the petitioner, submits that in view of the amendment brought in Section 16 of the Central Goods and Services
Page No.# 5/6 Tax Act, 2017 by inserting Sub-Section (5), the impugned Order-in-Original dated 30.03.2023 and recovery notices dated 05.08.2022 and 24.08.202, passed by the respondent authorities may be set aside and matter be remanded back and direction may be issued to pass an appropriate order in view of insertion of Sub-Section (5) of Section 16 of Central Good and Services Tax Act, 2017. 7. In view of the submissions made by the learned counsels for the parties and also considering the amendment of Section 16 of the Central Goods and Services Tax Act, 2017, by inserting Sub-Section (5), the impugned order in original dated 30.03.2023 and recovery notices dated 05.08.2022 and 24.08.202, are hereby set aside without adjudicating the said orders on merit.
The respondent authorities are directed to consider and pass an appropriate order taking into consideration of the provision of Sub-Section (5) of Section 16 of the Central Goods and Services Tax Act, 2017, vide Amendment (Finance Act, 2024) dated 16.08.2024. 9. This writ petition stands disposed of, in terms of the above observation and direction. JUDGE JUDGE
Comparing Assistant
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Reproduced from the public record of the Gauhati High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.