M/S M A R Fabricators INDIA PVT LTD vs. The Deputy Commissioner

The writ Court has disposed of the writ petition by order dated 17.11.2023 with liberty to the appellant to avail appropriate remedy as against the show NC: 2025:KHC-D:1953-DB cause notice and the order-in-original with liberty to petitioner to seek exclusion of the time spent in prosecuting the writ petition but on an application. This disposal is in the light of the statement on behalf of the appellant that it will not pursue its grievance on the validity of Section 16 of the CGST/SGST Act. However, the appellant has filed an application, and the writ Court has allowed this application on 07.06.2024 modifying the order dated 17.11.2023 insofar as the appellant giving up the grievance against the constitutional validity but observing that such grievance will not survive in the light of the orders in other matters.

Sri.M.N.Shankare Gowda, the learned counsel for the appellant, submits that the petitioner is issued with the show cause notice dated 24.06.2021 because the appellant has filed his returns belatedly to avail Input Tax Credit [for short, ‘ITC’] and that cause shown by the appellant is not accepted resulting in the assessment [order-in-original] dated 05.07.2022 for the period between April-2017 and July-2019. The learned counsel submits that after the writ Court’s impugned order dated 17.11.2023, the NC: 2025:KHC-D:1953-DB CGST/SGST Acts are amended inserting Section 16(5), which enables a registered assessor to take ITC in any belated Return filed up to 30.11.2021, notwithstanding the provisions of Section 16(4), in respect of invoices for supply of goods or service or both for the period pertaining to the financial years 2017-18, 2018-19, 2019-2020 and 2020-21. 4. Sri. M. N. Shankare Gowda canvasses that the appellant in terms of this amendment would be entitled to ITC, but the petitioner will not be able to take ITC unless the writ Court’s orders dated 17.11.2023 and 07.06.2024 and the order-in-original dated 05.07.2022 are quashed. The learned counsel submits that in similar circumstances a number of writ petitions are disposed of quashing the order- in-original and relegating the assessee to the stage of show cause notice leaving open all questions to be decided, and in this regard, the learned counsel relies upon order dated 03.09.2024 in WP No.3959/2021 clarifying that though this order will not be an instance where the assessment order is quashed relegating the concerned assessee to the stage of NC: 2025:KHC-D:1953-DB show cause notice, but there are many instances where the orders-in-original are interfere with.

Sri. J.M. Gangadhar, the learned Additional Advocate General for the fourth respondent, and Sri. Girish S. Hulmani and Sri. Shivaraj S. Ballolli, the learned counsels on record for respondents other than the fourth respondent, are heard in light of the canvas as aforesaid. The learned Additional Advocate General and the learned counsels do not dispute that in some cases the writ petitions have been allowed with the insertion of Section 16(5) relegating the assesses to the stage of show cause notice calling upon the concerned Assessing Officers to decide on whether such assessee must be given the benefit of the provisions of Section 16(5) of CGST/SGST Act, but they also state that the authorities are trying to verify whether there is any clarification by the Central Board of Direct Taxes on extending the benefit of Section 16(5) of the Act to an assessee in whose case the orders-in-original are passed. NC: 2025:KHC-D:1953-DB

These rival submissions are considered. This Court must observe that the respondents do not contest that where only show cause notices are issued, the benefit under Section 16(5) of the CGST/SGST Act must be extended provided the requisite conditions therefore are satisfied. However, they propose to contend that unless there is appropriate clarification from the Central Board of Indirect Taxes, the benefit cannot be extended in cases where the orders-in-original are passed. This Court is of the considered view that if this is an aspect that could be considered even by the Assessment Officer, there will be no justification to keep the petition pending especially when the Assessing Officer will have to examine the records to ascertain whether the requirements of Section 16 of the CGST/SGST Act are satisfied.

If this Court intervenes in a manner where all questions are left open to be decided by the Assessment Officer without prejudice to any defense that could be available either to the appellant or to the respondents, there will be complete adjudication. As such, this Court is of the NC: 2025:KHC-D:1953-DB considered view that there must be limited interference in this proceeding restoring the assessee to the stage of show cause notice dated 24.06.2021 and as such the following: