M/S Lalit Enterprises 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 Article 19(1)(g) or Article 300-A of the Constitution of India. The Court found no merit in the petitioners' arguments that the provision imposes unreasonable restrictions or is in conflict with fundamental rights. Relying on Supreme Court judgments in ALD Automotive Private Limited and Jayam and Company, the Court reasoned that ITC is a concession granted by the statute, and the conditions stipulated therein, including the time limits for claiming it, must be strictly adhered to. The Court rejected the argument to read down the provision, finding no necessity to do so, and stated that there is a presumption of constitutional validity of legislation. The Court also held that the provision is not inconsistent with or in derogation of any fundamental right. The Court explicitly rejected the submission that the provision should be declared directory, emphasizing its clear language and the dependent nature of ITC on fulfilling requisite conditions. The Court did not expressly leave any issue undecided.

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 details of the orders or actions under challenge and the tax periods involved are not explicitly detailed in the provided excerpt. The procedural history leading to these writ petitions is also not elaborated upon. The core of the dispute, as revealed in the excerpt, revolves around the interpretation and constitutional validity of Section 16(4) of the CGST/BGST Act.

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 fundamental rights. Petitioner's arguments: The petitioners contended 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. They argued that it is violative of Article 302 of the Constitution and in conflict with Article 13 of the Constitution, primarily due to the absence of a rationale behind fixing a cut-off date for filing returns. They also feebly argued that the provision should be read as directory and not mandatory. Revenue/State's arguments: The State, through the learned Advocate General, referred to Supreme Court decisions in ALD Automotive Private Limited and Jayam and Company, which upheld similar provisions in other tax statutes, emphasizing that ITC is a concession whose conditions must be strictly complied with. The respondents implicitly argued for the mandatory nature of the provision and its constitutional validity.