M/S Ram Constructions Through Its Proprietor Ram Chandra Saha vs. Union Of INDIA Thro The Secretary Ministry Of Finance Department Of Revenue

Held

The Court, in light 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 2017-18. The Court further ordered that 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 collection until the date of repayment. The Court did not explicitly rule on the vires of Section 16(4) or the amendment to Rule 61(5) but provided relief based on the subsequent legislative insertion. The issue of the validity of the order dated 31.01.2023 and DRC-07 dated 10.10.2023 was implicitly resolved by the direction to allow ITC and refund penalties.

Facts

M/s. Ram Constructions, a proprietorship concern, filed a writ petition before the Jharkhand High Court challenging Section 16(4) of the Central Goods and Services Tax Act, 2017, and an amendment to Rule 61(5) of the Central Goods and Services Rules, 2017. The petitioner argued these provisions violated constitutional rights and the basic structure of the GST Act by restricting Input Tax Credit (ITC) availability within a time frame and retrospectively declaring GSTR-3B as a return. The petitioner also sought to quash an order dated 31.01.2023 and a DRC-07 dated 10.10.2023. The respondents included the Union of India, the Central Board of Indirect Taxes and Customs, and state tax authorities.

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 (Articles 14, 19(1)(g), and 300A) and the basic structure of the GST Act? 2. Whether the amendment to Rule 61(5) of the Central Goods and Services Rules, 2017, vide Notification No. 49/2019, declaring GSTR-3B as a return retrospectively from 01.07.2017, is ultra vires the Constitution of India (Articles 14, 19(1)(g), and 300A) and interferes with the vested right to avail ITC? Petitioner's arguments: The petitioner contended that Section 16(4) is unconstitutional as it arbitrarily restricts ITC, violating the right to trade and property. They argued that the retrospective amendment to Rule 61(5) unfairly impacts their vested right to claim ITC. The petitioner sought to prohibit the respondents from acting upon these provisions and to quash the impugned orders. Revenue's arguments: The judgment records that both sides were heard, but it does not explicitly detail the arguments presented by the respondents (Union of India and State Tax Authorities) in defense of the impugned provisions.