M/S Sikandar Sah And Sons vs. The State Of Bihar

Held

The 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 it should be read down. The reasoning was based on established Supreme Court precedents, specifically ALD Automotive Private Limited and Jayam and Company, which held that Input Tax Credit is a concession granted by the statute, and the conditions stipulated for its availment must be strictly complied with. The Court emphasized that fiscal legislation with uniform application cannot be considered violative of the right to freedom of trade. The Court rejected the plea to declare the provision directory, citing the clear language of Section 16. The ratio decidendi is that statutory concessions like ITC are subject to conditions, and time limits for claiming them are valid and enforceable.

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, Neelam Automobiles, and Nidhi Trading Company, filed writ petitions before the Patna High Court. These petitions challenged the provisions of the Goods and Services Tax (GST) law, specifically concerning the availment of Input Tax Credit (ITC). The core of the dispute revolved around the restrictions imposed on claiming ITC, particularly the time limits stipulated in the relevant sections of the CGST/BGST Act. The petitioners sought relief against the actions of various GST authorities, including the Union of India, the State of Bihar, and different levels of CGST and State Tax officers.

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 the fundamental rights of traders? The petitioners argued that sub-section (4) of Section 16 imposes unreasonable and disproportionate restrictions on the 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 of the Constitution due to the absence of a rationale behind the cut-off date for filing returns. They also contended that the provision should be read down as directory and not mandatory. The revenue, through the Advocate General, relied on Supreme Court decisions in ALD Automotive Private Limited and Jayam and Company to argue that ITC is a concession and its availment is subject to strict compliance with statutory conditions, and that fiscal legislation with uniform application cannot be violative of Article 19(1)(g).