Khushee Construction vs. The Union Of INDIA

Held

The Patna High Court held that sub-section (4) of Section 16 of the CGST/BGST Act is constitutionally valid and does not violate Articles 19(1)(g) or 300-A of the Constitution. The Court found no merit in the petitioners' submissions to read down the provision or declare it directory. The Court reasoned that the concession of ITC, as provided under sub-section (1) of Section 16, is contingent upon fulfilling the conditions laid down in various provisions, including sub-section (4). Relying on Supreme Court decisions in ALD Automotive Private Limited and Jayam and Company, the Court affirmed that fiscal legislation with uniform application is not violative of Article 19(1)(g). The Court concluded that the provision is not inconsistent with or in derogation of any fundamental right guaranteed under the Constitution. The ratio decidendi is that conditions for availing statutory concessions, such as ITC, must be strictly complied with, and such conditions, if uniformly applied, do not infringe upon fundamental rights.

Facts

Multiple petitioners, including Gobinda Construction, Shtrudhan Kumar Amit Kumar, Shiva Escorts, Komal Medical Agency, M/s Ram Kishun Saw Mill Trading and Company, Shanti Motors, Mrityunjay Kumar (M/s J.M.C.M. Sales Patna), Neelam Automobiles, and Nidhi Trading Company, filed writ petitions before the Patna High Court. These petitions challenged actions or orders related to the Goods and Services Tax (GST) regime. The specific tax periods and amounts in dispute are not detailed in the provided excerpt. The procedural history leading to these writ petitions is not fully elaborated, but it appears to involve challenges to the application of certain GST provisions by the revenue authorities.

Key Issues

1. Whether sub-section (4) of Section 16 of the CGST/BGST Act, which imposes conditions for claiming Input Tax Credit (ITC), is constitutionally valid and does not violate fundamental rights. 2. Whether sub-section (4) of Section 16 of the CGST/BGST Act imposes unreasonable and disproportionate restrictions on the right to freedom of trade and profession under Article 19(1)(g) of the Constitution, and is thus violative of Article 302 and Article 13 of the Constitution. Petitioner's arguments: The petitioners contended that sub-section (4) of Section 16 of the CGST/BGST Act should be read down to be directory rather than mandatory. They argued that this provision imposes unreasonable and disproportionate restrictions on their right to freedom of trade and profession guaranteed under Article 19(1)(g) of the Constitution, making it violative of Article 302 and Article 13. They based this argument on the absence of a rationale behind fixing a cut-off date for filing returns. Revenue's arguments: The revenue authorities, represented by the Advocate General for the State, did not explicitly present their arguments in the provided excerpt but relied on Supreme Court decisions to support the validity of the provision. They argued that fiscal legislation with uniform application cannot be violative of Article 19(1)(g), and the question of violation of Articles 302 and 13 does not arise.