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M/S North INDIA Engineering And Anr vs. The Union Of INDIA And 3 Ors

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WP(C)/240/2024HC GauhatiGSTCNR GAHC04000767202415 September 2024Bench: HONOURABLE MR. JUSTICE KALYAN RAI SURANA,HONOURABLE MR. JUSTICE KARDAK ETE5 pages
AI SummaryRemanded

Facts

The petitioners, M/s North India Engineering and its proprietor Taba Rama, challenged the vires of Section 16(4) of the GST Act, 2017, an Order-in-Original dated 22.03.2024 passed by the Additional Commissioner, CGST & CX, and a Demand-cum-show cause notice dated 08.05.2023 issued by the Superintendent (Anti Evasion). The notice pertained to irregular availment of Input Tax Credit (ITC) amounting to Rs. 4,34,66,382.27 for the financial year 2018-19, and demanded CGST and SGST totaling Rs. 4,34,66,380/- availed and utilized from January 2019 to March 2019. Penalties were also proposed under Section 73(9) and Section 122(2)(a) of the CGST Act, 2017, and corresponding SGST provisions.

Held

The Court noted that during the pendency of the writ petition, Section 16 of the Central Goods and Services Tax Act, 2017, was amended by inserting Sub-Section (5) with retrospective effect from 01.07.2017, vide Gazette Notification dated 16.08.2024. This newly inserted Sub-Section (5) provides that for invoices or debit notes pertaining to Financial Years 2017-18, 2019-20, and 2020-21, a registered person is entitled to take input tax credit in any return filed under Section 39 up to the thirtieth day of November, 2021. Both the learned counsel for the petitioners and the respondents agreed that this amendment redressed the grievances raised by the petitioners. Consequently, the Court set aside the impugned Order-in-Original dated 22.03.2024 and the Demand notice dated 15.08.2023 without adjudicating them on merits. 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, as amended.

Key Issues

1. Whether Section 16(4) of the Central Goods and Services Tax Act, 2017, as it stood prior to the amendment, was ultra vires the Constitution. 2. Whether the Order-in-Original dated 22.03.2024 and the Demand-cum-show cause notice dated 08.05.2023, which were based on the provisions of Section 16(4) of the CGST Act, 2017, were sustainable in law. The petitioners argued that Section 16(4) was arbitrary and discriminatory. The respondents, represented by the Union of India and the Commissioner CGST & CX, did not explicitly record their arguments on the vires of Section 16(4) but agreed that the subsequent amendment to Section 16 would address the petitioners' grievances. The core of the dispute revolved around the eligibility and time limits for availing Input Tax Credit under Section 16 of the CGST Act.

Sections Cited

Section 16(4), Section 16(5), Section 73(1), Section 73(9), Section 122(2)(a), Section 39

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
Page No.# 1/5 GAHC040007672024 THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH) (ITANAGAR BENCH) Case No. : WP(C)/240/2024 M/s North India Engineering and Anr having its office at MEMCHI-1, Doimukh, Papumpare District, Arunachal Pradesh, represented by its proprietor Shri Taba Rama 2: Taba Rama Age: Occupation : Son of Shri Taba Gomb resident of Emchi- 1 village proprietor of M/s North India Engineerin VERSUS The Union of India and 3 Ors represented by its Secretary, Govt of India, Ministry of Finance, Department of Revenue, New Delhi 110001 2:The Commissioner CGST and CX Age: 0 Occupation : Itanagar Sector A Naharlagun 791110 3:The Superintendent (Anti Evasion) Age: 0 Occupation : Office of the Commissioner CGST and CX Page No.# 2/5 Itanagar Sector A Naharlagun 791110 4:The Additional Commissioner Age: 0 Occupation : CGST and CX Itanagar Sector A Naharlagun 79111 Advocate for the Petitioner : A. Goyal Advocate for the Respondent : Marto Kato, (Election commission),DSGI M. K. Boro, SC (CGST & CX) BEFORE HONOURABLE MR. JUSTICE KALYAN RAI SURANA HONOURABLE MR. JUSTICE KARDAK ETE

ORDER Date : 16.09.2024 (Kardak Ete, J) Heard Mr. A. Goyal, 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, for the respondent Nos. 2, 3 & 4. 2. By filing this writ petition, the petitioners have put to challenge the vires of Section 16(4) of the GST Act, 2017 and the Order-in-Original dated 22.03.2024, passed by the Additional Commissioner, CGST & CX/respondent No. 2, and also impugned Demand-cum-show cause notice dated 08.05.2023, issued by the Page No.# 3/5 Superintendent (Anti Evasion)/respondent No. 3 by which, the petitioners have been issued notice pertaining to irregular availment of Input Tax Credit (ITC) in respect of financial year 2018-19 by availing Rs. 4,34,66,382.27/- and demanding SGST and CGST, totalling Rs. 4,34,66,380/- availed and utilized during the period from January, 2019 to March, 2019 under Section 73(1) of the CGST Act, 2017, read with the corresponding provisions of Arunachal Pradesh State Goods and Services Act, 2017, with penalty under Section 73(9) read with Section 122(2)(a) of CGST Act, 2017, as well as the relevant provisions of SGST Act, 2017. 3. During the pendency of the writ petition, vide Gazette Notification dated 16.08.2024, an amendment in Section 16 of the Central Goods and Services Tax, has been brought 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.”

5.

The learned counsels appearing for the respondents are in agreement that Page No.# 4/5 in view of the insertion of Sub-Section (5) in Section 16 of the Central Goods and Services Tax Act, 2017, the grievances raised by the petitioner has been redressed.

6.

The learned counsel for the petitioner, submits that in view of the amendment brought in Section 16 of the Central Goods and Services Tax Act, 2017 by inserting Sub-Section (5), the impugned order dated 22.03.2024 and the notice dated 18.05.2023 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 brought in Section 16 of the Central Goods and Services Tax Act, 2017, by inserting Sub-Section (5), the impugned Order- in-Original, dated 22.03.2024 and Demand notice dated 15.08.2023, are hereby set aside without adjudicating the said orders on merit.

8.

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

Page No.# 5/5 and direction. JUDGE JUDGE Comparing Assistant

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.