Nidhi Trading Company 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. The Court found no merit in the petitioners' arguments that the provision violates Article 19(1)(g) or Article 300-A of the Constitution. The Court reasoned that fiscal legislation with uniform application cannot be considered violative of Article 19(1)(g). It relied on Supreme Court decisions in ALD Automotive Private Limited and Jayam and Company, which established that Input Tax Credit (ITC) is a benefit or concession extended under the statutory scheme, and the conditions for availing such concessions must be strictly complied with. The Court rejected the plea to read down the provision, stating that the clear language of Section 16(4) makes the conditions for claiming ITC mandatory. Therefore, the Court dismissed the writ applications.

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 taken by various GST authorities. While the specific actions and tax periods are not detailed for each petitioner, the overarching context involves disputes related to GST provisions, particularly concerning input tax credit (ITC). The revenue authorities, including the Union of India and the State of Bihar through its tax departments and commissioners, are the respondents. The procedural history leading to these writ petitions is not explicitly stated beyond the filing of the cases.

Key Issues

1. Whether sub-section (4) of Section 16 of the CGST/BGST Act, which imposes a time limit for claiming input tax credit (ITC), is constitutionally valid and does not violate Article 19(1)(g) (freedom of trade and profession) or Article 300-A (right to property) of the Constitution of India? 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 there is no rationale behind fixing a cut-off date for filing returns and that the provision should be read down to be directory rather than mandatory. They also argued that the provision is in teeth of Article 13 of the Constitution. Revenue's arguments: The revenue authorities did not explicitly present arguments in the provided text, but the court's reasoning implies that they defended the validity of Section 16(4) by relying on Supreme Court precedents that uphold similar time restrictions for claiming concessions like ITC.