Singh Construction Company Through Its Proprietor Nirmal Singh vs. The State Of Jharkhand Through The Commissioner Of State Tax

Held

The Court noted that Section 118 of the Finance Act, 2024, inserted sub-section (5) into Section 16 of the CGST Act, effective from July 1, 2017. This new sub-section allows registered persons to claim ITC for invoices pertaining to Financial Years 2017-18, 2018-19, 2019-20, and 2020-21, if the return under Section 39 is filed up to November 30, 2021. The Court observed that the impugned order was passed without considering this newly inserted provision. The State, acknowledging the implication of this amendment, consented to the matter being adjudicated afresh. Consequently, the Court quashed the impugned order dated July 15, 2023, and remitted the matter back to the authority for a fresh decision, taking into account the implications of sub-section (5) of Section 16 of the CGST Act. The Court explicitly stated it had not entered into the merits of the case. The authority was directed to pass a fresh order within two months.

Facts

The petitioner, Singh Construction Company, filed a writ petition challenging Section 16(4) of the Jharkhand Goods and Services Tax Act, 2017, and an amendment to Rule 61(5) of the Jharkhand Goods and Services Rules, 2017. The petitioner also sought to quash an order dated July 15, 2023, passed by the Assistant Commissioner of State Tax, Hazaribagh Circle, which disallowed input tax credit (ITC) for financial years 2018-19 and 2019-20, creating a demand of Rs. 6,25,50,596.66 and Rs. 95,13,394.73 respectively. The petitioner argued that these provisions and the impugned order infringed upon their constitutional rights and vested rights to claim ITC. The State initially sought time to seek instructions regarding the impact of Section 118 of the Finance Act, 2024.

Key Issues

1. Whether Section 16(4) of the Jharkhand Goods and Services Tax Act, 2017, is ultra vires the Constitution of India, violating Articles 14, 19(1)(g), and 300A, and the basic structure of the Act, by imposing a time limit for availing Input Tax Credit (ITC)? (Petitioner's contention: Yes, it infringes fundamental rights and the legislative scheme. Revenue's contention: Not recorded). 2. Whether the amendment to Rule 61(5) of the Jharkhand Goods and Services Rules, 2017, making GSTR-3B a valid return retrospectively from July 1, 2017, is ultra vires the Constitution of India, violating Articles 14, 19(1)(g), and 300A, by interfering with the vested right to ITC? (Petitioner's contention: Yes, it affects vested rights. Revenue's contention: Not recorded). 3. Whether the impugned order dated July 15, 2023, disallowing ITC under Section 16(4) read with Rule 36, passed after an inspection under Section 67 read with Rule 139, is liable to be quashed as being in violation of principles of natural justice and equity, especially in light of pending judicial review on the vires of Section 16(4)? (Petitioner's contention: Yes, it infringes rights and is against natural justice. Revenue's contention: Not recorded).