M/S Sanjeeban Medical Through Its Proprietor Namely Mr Snehasish Chakraborty vs. Union Of INDIA Through The Secretary Ministry Of Finance Deptt Of Revenue

Held

The Court, in view of Clause (5) of Section 16 inserted by the Finance (No.2) Act, 2024, with effect from 01.07.2017, directed the respondents to allow the petitioner to take Input Tax Credit (ITC) in respect of delayed returns filed for the Financial Year 2018-19. Consequently, any interest and penalty levied on the petitioner by the respondents for this period shall be refunded with 6% per annum interest from the date of payment until the date of refund. The Court did not explicitly address the vires of Section 16(4) or Rule 61(5) in its final order, but rather granted relief based on the subsequent legislative amendment. The specific reasoning for the refund and interest is tied to the aforementioned legislative insertion.

Facts

The petitioner, M/s. Sanjeeban Medical, a sole proprietorship, filed a writ petition challenging Section 16(4) of the Central Goods and Services Tax Act, 2017, and Rule 61(5) of the Central Goods and Services Rules, 2017, as amended. The petitioner argued these provisions violated constitutional rights by restricting Input Tax Credit (ITC) availability within a time frame and retrospectively declaring GSTR-3B as a return. The petition also sought to quash an order dated 06.07.2023 and a summary order in DRC-07 dated 06.07.2023. The respondents are the Union of India, the Central Board of Indirect Taxes and Customs (CBIC), the Superintendent of Central GST & C. Ex., Range Deoghar, and the State of Jharkhand.

Key Issues

1. Whether Section 16(4) of the Central Goods and Services Tax Act, 2017, which restricts the availment of Input Tax Credit (ITC) within a specified time frame, is ultra vires the Constitution of India, specifically Articles 14, 19(1)(g), and 300A, and the basic structure of the GST Act? The petitioner contended that this time restriction is arbitrary and interferes with the fundamental right to carry on business and the right to property. They argued it violates the principle of seamless flow of credit. The revenue's contentions are not explicitly recorded in the judgment. 2. Whether the amendment under Rule 61(5) of the Central Goods and Services Rules, 2017, making GSTR-3B a return under Section 39 with retrospective effect from 01.07.2017, is ultra vires the Constitution, particularly Articles 14, 19(1)(g), and 300A? The petitioner argued this retrospective amendment unfairly impacts their vested right to claim ITC. The revenue's contentions are not explicitly recorded in the judgment.