Propcare Mall Management (INDIA) PVT LTD vs. The Deputy Commissioner Of
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Cause title — parties, addresses and appearances
ORAL ORDER
In this petition, petitioner seeks for the following reliefs:- “(i) Quashing the impugned order bearing No. DCCT(Audit)1.2/T/2023-24 passed by the 1st Respondent on 16.03.2024 under Section 73 of the Central Goods and Services Tax Act, 2017 and Karnataka Goods and Services Tax Act, 2017 for April 2018 to March 2019 (Annexure 'A-1'); (ii) Quashing the impugned summary of order in Form GST DRC 07 bearing Reference No. ZD2903240405341 issued by the 1st Respondent on 16.03.2024 under Section 73 of the Central Goods and Services Tax Act, 2017 and Karnataka Goods and Services Tax Act, 2017 read with Rule 142(5) of the Central Goods and Services Tax Rules, 2017 for April 2018 to March 2019 (Annexure 'A-2') (iii) Directing that the amount of Rs.1,81,43,860/- reversed by the Petitioner on 05.03.2022 in Form GST DRC-03 bearing ARN AD290322005277A (Annexure 'H') may kindly be refunded to the Petitioner forthwith together with applicable thereon; HC-KAR NC: 2025:KHC:42973 (iv) Declaring that the denial of Input Tax Credit to the Petitioner solely on the basis of the merely procedural and technical restriction on taking Input Tax Credit that is set out in Section 16(4) of the GST Acts, is unconstitutional, unlawful and arbitrary, more so where the overriding and substantive provisions in Sections 16(1) and (2) of the GST Acts, have admittedly been fulfilled by the Petitioner (Annexure 'B-1'); (v) Declaring that the retrospective amendment to Rule 61(5) (Annexure 'C-2') of the Central Goods and Services Tax Rules, 2017, by way of Notification No.49/2019-CT is unconstitutional and ultra vires the Central Goods and Services Tax Act, 2017, and declaring that, on the contrary, the said amendment shall apply only for tax periods commencing after the amending Notification, i.e. 09.10.2019, and not for tax periods commencing before the said date; (vi) Declaring that the retrospective amendment to Rule 61(5) (Annexure 'D-2') of the Karnataka Goods and Services Tax Rules, 2017, by way of Notification (4- F/2019) No. FD 47 CSL 2017 is unconstitutional and ultra vires the Karnataka Goods and Services Tax Act, 2017, and declaring that, on the contrary, the said amendment shall apply only for tax periods commencing after the amending Notification, i.e. 30.10.2019, and not for tax periods commencing before the said date; HC-KAR NC: 2025:KHC:42973 (vii) Declaring that Notification No.49/2019-CT dated 09.10.2019 (Annexure 'C-1'), to the extent it retrospectively amends Rule 61(5) of the Central Goods and Services Tax Rules, 2017, is illegal and ultra vires the Central Goods and Services Tax Act, 2017; (viii) Declaring that Notification No. (4-F/2019) No. FD 47 CSL 2017 dated 30.10.2019 (Annexure 'D-1'), to the extent it retrospectively amends Rule 61(5) of the Karnataka Goods and Services Tax Rules, 2017, is illegal and ultra vires the Karnataka Goods and Services Tax Act, 2017; Without prejudice to the above and in any event, (ix) Condoning the delay of 17 days in the Petitioner filing its monthly returns in Form GSTR-3B for the tax periods December 2018 to February 2019 with reference to the last date of 20.10.2019 that is said to be set out in terms of Section 16(4) of the Central Goods and Services Tax Act, 2017, and the Karnataka Goods and Services Tax Act, 2017, and thereby permitting the Petitioner to take Input Tax Credit of the tax admittedly paid to its vendors and thereafter utilise the same in accordance with law; (x) Condoning the delay of 73 days in the Petitioner filing its monthly return in Form GSTR-3B for the tax period March 2019 with reference to the last date of 20.10.2019 that is said to be set out in terms of Section 16(4) of the Central Goods and Services Tax HC-KAR NC: 2025:KHC:42973 Act, 2017, and the Karnataka Goods and Services Tax Act, 2017, and thereby permitting the Petitioner to take Input Tax Credit of the tax admittedly paid to its vendors and thereafter utilise the same in accordance with law; and (xi) pass such other or further orders as this Hon'ble Court may deem fit in the facts and circumstances of the case, and in the interests of justice and equity.”
Heard learned counsel for the petitioner, learned AGA for respondent Nos.1, 2, 3 and 8 and learned counsel for respondent No.4, 5 to 7 and perused the material on record.
A perusal of the material on record will indicate that the issue in controversy involved in the present petition is directly and squarely covered by the judgment of this Court in the case of M/s.Sadhana Commissioner of Central Tax & others – W.P.No.6138/2020 dated 03.09.2024, which reads as under:-
Heard learned Senior counsel for the petitioner and learned counsel for the respondents – revenue and learned AGA for the State and perused the material on record. HC-KAR NC: 2025:KHC:42973
Learned Senior counsel for the petitioner submitted that though several contentions have been urged by the petitioner who has also sought for various reliefs, during the pendency of the present petition, a new provision i.e., Section 16(5) has been inserted by “The Finance (No.2) Act, 2024” vide Central Act 15 of 2024, in which, Clause No.118 provides for condonation of delay in availment of credit and extended the time limit by providing that for supplies pertaining to the financial years 2017-18, 2018-19, 2019-20 and 2020-21, the petitioner would be entitled to avail / claim credit in any return filed up to 30.11.2021. It is submitted that the said “The Finance (No.2) Act, 2024” received presidential asset on 16.08.2024 and would be notified shortly. It was further submitted that in cases where assessees had paid amounts as pre-deposit under court orders or in appeal proceedings or amounts recovered by the respondents – revenue are paid by the assessees pursuant to recovery proceedings, the embargo contained in Clause 150 of the said “The Finance (No.2) Act, 2024” would not apply and was not applicable to the assessees, who would not be covered by the said embargo and consequently, they would be entitled to refund of the said amounts. It is therefore submitted that without going into the various other contentions urged by the petitioner and reliefs sought for by it and without expressing any opinion on the same, the present petition may be disposed of with a direction to consider and implement and give effect to the amended provisions contained in Section 118 of “The Finance (No.2) HC-KAR NC: 2025:KHC:42973 Act, 2024” relating to insertion of Section 16(5) to the CGST Act / KGST Act within a stipulated time frame.
Per contra, learned counsel for the respondents – revenue and learned AGA for the respondents – State jointly and fairly submit that it is true that Section 16(5) was inserted vide Clause 118 of “The Finance (No.2) Act, 2024” and that the same was applicable to the petitioner and other assessees and the time for filing returns and availing input tax credit would stand extended upto 30.11.2021. It is also submitted that since presidential asset has already been received to “The Finance (No.2) Act, 2024”, necessary Notification would be issued shortly and as such, the present petition may be disposed of accordingly.
As rightly contended by the learned Senior counsel for the petitioner as well as learned counsel for the respondents – revenue and learned AGA for the State, Section 16(5) was inserted into the CGST Act vide Clause 118 of the “The Finance (No.2) Act, 2024”, which reads as under:- “118. In Section 16 of the Central Goods and Services Act, with effect from the 1st day of July, 2017, after sub-section(4), the following sub-sections shall be inserted, namely:- (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, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax HC-KAR NC: 2025:KHC:42973 credit in any return under Section 39 which is filed up to the thirtieth day of November, 2021. (6) xxxxxxxxxxxxx (i) xxxxxxxxxxxxxx (ii)xxxxxxxxxxxxxx ”
In view of the aforesaid amendment by inserting Section 16(5) to the CGST / KGST Act, the present petition deserves to be disposed of relegating the parties to the original authority to implement and give effect to the said provisions after providing sufficient and reasonable opportunity to the petitioner and hearing them and proceed further in accordance with law and by issuing certain directions in this regard.
In the result, I pass the following:- ORDER (i) Petition is hereby disposed of. (ii) The parties are relegated to the stage of show cause notice at Annexure-C dated 13.02.2020 issued by the respondent(s) and the respondents are directed to give effect to and implement the amended provisions contained in Section 118 of “The Finance (No.2) Act, 2024” relating to insertion of Section 16(5) to the CGST Act / KGST Act by providing sufficient and reasonable opportunity and hear the petitioner and proceed further in accordance with law within a period of one month from the date of receipt of a copy of this order. HC-KAR NC: 2025:KHC:42973 (iii) The impugned blocking of the Input Tax Credit (ITC) ledger of the petitioner vide Annexure-F dated 03.02.2020 is hereby quashed. (iv) The respondents are directed to unblock and release the credit balance of the petitioner in their ITC Ledger / Account, if not already released, immediately / forthwith upon receipt of a copy of this order without any delay. (v) All rival contentions on all other prayers sought for by the petitioner including the challenge to the statutory provisions are kept open and no opinion is expressed on the same.
In view of the aforesaid facts and circumstances and the judgment of this Court in M/s.Sadhana Enviro Engineering’s case supra, I am of the view that the present petition also deserves to be allowed and disposed of in terms of the said judgment.
In the result, I pass the following:- ORDER (i) Petition is hereby disposed of in terms of the judgment of this Court in the case of M/s.Sadhana & others – W.P.No.6138/2020 dated 03.09.2024. HC-KAR NC: 2025:KHC:42973 (ii) The impugned Order at Annexures-A1 and A2 dated 16.03.2024 is hereby quashed.
(iii) The parties are relegated to the stage of show cause notice dated 07.12.2023 issued by the respondent(s) and the respondents are directed to give effect to and implement the amended provisions contained in Section 118 of “The Finance (No.2) Act, 2024” relating to insertion of Section 16(5) to the CGST Act / KGST Act by providing sufficient and reasonable opportunity and hear the petitioner and proceed further in accordance with law within a period of one month from the date of receipt of a copy of this order.
(iv) All rival contentions on all other prayers sought for by the petitioner including the challenge to the statutory provisions are kept open and no opinion is expressed on the same.
(v) It is further directed that the question as to whether the petitioner would be entitled to refund of HC-KAR NC: 2025:KHC:42973 amount of Rs.1.81 Crores which has been reversed on 05.03.2022 by the petitioner is kept open to be decided by respondent No.1 while reconsidering the matter afresh as stated supra. (S.R.KRISHNA KUMAR) JUDGE
MDS List No.: 2 Sl No.: 45
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.