M/S. Sri. Manjunatha Steels vs. Union Of INDIA - Karnataka High Court, 03 September 2024

Cause title — parties, addresses and appearances

- 1 - NC: 2024:KHC:36256 WP No. 14699 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 3RD DAY OF SEPTEMBER, 2024 BEFORE THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 14699 OF 2023 (T-RES) BETWEEN: M/S. SRI. MANJUNATHA STEELS NO 28/A, UTTARAHALLI HOBLI, NEAR KHODAYS GLASS FACTORY, AVALAHALLI VILLAGE, BENGALURU 560 062 (REPRESENTED BY ITS PROPRIETOR SRI V RAMESH) …PETITIONER (BY SRI. ATUL KRISHNA RAO ALUR.,ADVOCATE) AND: 1. UNION OF INDIA THROUGH ITS SECRETARY (REVENUE) MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI 110 001. 2. THE STATE OF KARNATAKA REPRESENTED BY THE PRINCIPAL SECRETARY FINANCE DEPARTMENT, GOVERNMENT OF KARNATAKA, BENGALURU 560 001. 3. THE GST COUNCIL THROUGH ITS CHAIR PERSON, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI 110 001. 4. THE COMMISSIONER OF COMMERCIAL TAXES VANIJE THERIGE KARYALAYA-1, KALIDAS ROAD, GANDHI NAGAR, BENGALURU 560009 Digitally signed by LEELAVATHI S R Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:36256 WP No. 14699 of 2023 5. THE ASSISTANT COMMISSIONER COMMERCIAL TAXES, LGSTO-120, BMTC-TTMC, 1ST FLOOR, JAYANAGAR 4TH BLOCK, BENGALURU 560 011. …RESPONDENTS (BY SRI. MADANAN.R.PILLAI, CGC FOR R-1 SRI. HEMAKUMAR.K, AGA FOR R-2, R-4 & R-5 SRI. AKASH.B.SHETTY, ADVOCATE FOR R-3) THIS W.P IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECT DECLARING THE PROVISIONS OF SEC 16(4) OF CGST ACT/ SGST ACT, 2017 ENCLOSED AS ANNEXURE-B AS BEING ILLEGAL, UNREASONABLE, ARBITRARY AND DISCRIMINATORY AND THEREFORE TO BE STRUCK DOWN AS VIOLATIVE OF ARTICLE 14, 19 AND 300A. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

ORAL ORDER

In this petition, petitioner seeks for the following reliefs:-

“ (A) Issue a writ of declaration or any other appropriate writ or direction declaring the provisions of section 16(4) of CGST Act/SGST Act, , 2017 enclosed as Annexure-B as being illegal, unreasonable arbitrary and discriminatory and therefore to be struck. Down as violative of Article 14, 19 and 300A;

(B) In the alternative, this Hon’ble Court may to read down’ the said wordings contained in Section 16(4) of CGST/SGST Act, 2017 enclosed as Annexure-B so as to NC: 2024:KHC:36256 interpret the time limit for taking input tax credit as procedural and directory in nature;

(C) Issue a writ of certiorari or any other appropriate writ or order to quash the order dated: 28.09.2022 issued by the Respondent-5 enclosed as Annexure-E, bearing No. GST 29AZHPR4029A1ZF as violative of Articles 14, 19 and 300A being unreasonable, arbitrary, oppressive, expressive and premeditated.

(D) Issue a writ of certiorari or any other appropriate writ or order to quash the demand dated: 28.09.2022 issued by the Respondent-5 enclosed as Annexure-F, bearing No. ACCT(LGSTO)-120/866/2022-23, as violative of Articles 14, 19 and 300A being unreasonable, Arbitrary, oppressive, excessive and premeditated. And (E) Grant such other reliefs as this Honorable High Court may think fit including the cost of this writ petition.”

Heard learned counsel for the petitioner and learned counsel for the revenue and learned AGA for the State 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 NC: 2024:KHC:36256 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.

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 NC: 2024:KHC:36256 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) 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:- NC: 2024:KHC:36256 “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 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) NC: 2024:KHC:36256 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. (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 Enviro Engineering NC: 2024:KHC:36256 Services vs. Joint Commissioner of Central Tax & others – W.P.No.6138/2020 dated 03.09.2024. (ii) The impugned Order at Annexure-E dated 28.09.2022 is hereby quashed. (iii) The parties are relegated to the stage of show cause notice dated 29.07.2022 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. (S.R.KRISHNA KUMAR) JUDGE

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