M/S Muskan Enterprises 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 of India. The Court found no merit in the petitioners' arguments that the provision imposes unreasonable restrictions or is arbitrary. The Court reasoned that fiscal legislation with uniform application cannot be violative of Article 19(1)(g). Relying on Supreme Court decisions in ALD Automotive Private Limited and Jayam and Company, the Court emphasized that Input Tax Credit is a concession extended by the statute, and the conditions for availing such concessions must be strictly complied with. The Court rejected the argument to read down the provision as directory, stating that the clear language of Section 16 mandates compliance. The concession of ITC is dependent on fulfilling the conditions laid down, including those in sub-section (4). Therefore, the provision is not inconsistent with or in derogation of any fundamental right.

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 the provisions of the Goods and Services Tax (GST) law, specifically concerning the Input Tax Credit (ITC). The core of the challenge revolved around the restrictions imposed on claiming ITC, particularly the time limits stipulated in the relevant sections of the CGST/BGST Act. The petitioners argued that these restrictions were arbitrary and violated their fundamental rights. The respondents were various authorities under the Union of India and the State of Bihar, including the Ministry of Finance, Commissioners of CGST and State Tax, and Assistant Commissioners.

Key Issues

1. Whether sub-section (4) of Section 16 of the CGST/BGST Act, which imposes restrictions on claiming Input Tax Credit (ITC) based on time limits for filing returns, is constitutionally valid? (Question of law) 2. Whether the said provision 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? (Question of law) Petitioner's arguments: The petitioners contended that sub-section (4) of Section 16 of the CGST/BGST Act imposes unreasonable and disproportionate restrictions on their right to freedom of trade and profession under Article 19(1)(g). They argued that the absence of a rationale behind fixing a cut-off date for filing returns made the provision violative of Article 302 and Article 13 of the Constitution. They also feebly argued that the provision should be read down as directory and not mandatory. Revenue's arguments: The judgment does not explicitly record separate arguments from the revenue. However, the court's reasoning relies on established Supreme Court precedents regarding the nature of concessions and the strict compliance required for availing them.