Lakshmi Narayan Yadav, A Proprietor Concern vs. 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 of India. The Court found no merit in the petitioners' arguments that the provision imposes unreasonable restrictions or that the fixation of a cut-off date lacks rationale. The Court reasoned that fiscal legislation with uniform application cannot be considered violative of the right to freedom of trade and profession. Relying on Supreme Court precedents like ALD Automotive Private Limited and Jayam and Company, the Court emphasized that Input Tax Credit is a concession granted by the statute, and the conditions stipulated for its availment, including time limits, must be strictly complied with. The Court rejected the plea to read down the provision as directory, stating that the clear language of Section 16 makes the fulfillment of conditions, including those in sub-section (4), mandatory for availing ITC. Consequently, the writ applications were dismissed.

Facts

These writ petitions were filed by various entities 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. The petitioners challenged the provisions of the Goods and Services Tax (GST) law, specifically concerning the availment of Input Tax Credit (ITC). The core of the challenge revolved around the restrictions imposed on claiming ITC, particularly the time limits stipulated in Section 16(4) of the CGST/BGST Act. The respondents are various authorities under the Union of India and the State of Bihar, including the Ministry of Finance, Commissioners of CGST and Central Excise, and State Tax 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 guaranteed under the Constitution of India, specifically Article 19(1)(g) (freedom of trade and profession) and Article 300-A (right to property)? Petitioner's arguments: The petitioners contended that sub-section (4) of Section 16 imposes unreasonable and disproportionate restrictions on their right to freedom of trade and profession, making it violative of Article 19(1)(g) and Article 300-A of the Constitution. They argued that the fixation of a cut-off date for filing returns lacks rationale. They also sought to have the provision read down as directory rather than mandatory. Revenue's arguments: The revenue authorities, through the Advocate General for the State, relied on Supreme Court decisions such as ALD Automotive Private Limited and Jayam and Company. They argued that ITC is a concession granted by the statute, and its availment is subject to strict compliance with the conditions laid down therein. They asserted that fiscal legislation with uniform application cannot be violative of Article 19(1)(g) and that the question of violation of other articles does not arise.