Challenge to GST ITC Time Limit Under S.16(4) Dismissed as Withdrawn by Madras High Court - 2025-08-18

Madras High Court Dismisses Challenge to GST Input Tax Credit Time Limit as Withdrawn

Chennai, Tamil Nadu – The Madras High Court has dismissed a writ petition challenging the constitutional validity of Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017, after the petitioner chose to withdraw the case. The provision, which imposes a time limit for claiming Input Tax Credit (ITC), remains a contentious issue for taxpayers nationwide.

A Division Bench comprising Honourable Dr. Justice Anita Sumanth and Honourable Mr. Justice N. Senthilkumar presided over the matter.

Background of the Case

The petition, filed by M/s. Sri Ramya Traders, sought a declaration that Section 16(4) of the CGST Act and the corresponding rules are ultra vires the parent Act and violate fundamental rights guaranteed under the Constitution of India. Specifically, the petitioner contended that the time limit for availing ITC was arbitrary and infringed upon Articles 14 (right to equality), 19(1)(g) (right to practice any profession, or to carry on any occupation, trade or business), and 300A (right to property).

The respondents in the case included the Union of India, the State of Tamil Nadu, and the Deputy State Tax Officer, Salem.

Court's Order

During the proceedings on July 9, 2025, the counsel for the petitioner, Mr. V. Srikanth, made an endorsement on the case file stating that the petitioner did not wish to pursue the matter further.

Accepting this submission, the High Court issued a brief order stating: "Mr.V.Srikanth, learned counsel for the petitioner, makes an endorsement to the effect that the petitioner does not wish to pursue this Writ Petition, recording which, this Writ Petition and connected miscellaneous petition are dismissed as withdrawn. No costs."

Implications of the Decision

The dismissal of the petition as "withdrawn" means the court did not deliberate on the merits of the constitutional challenge to Section 16(4) of the CGST Act. Consequently, this order does not set a legal precedent on the validity of the provision, and the crucial legal question remains open for adjudication in other pending cases before various high courts and the Supreme Court.

For businesses and tax professionals, the time limit for claiming ITC as prescribed under Section 16(4) continues to be legally enforceable until a superior court rules otherwise. This withdrawal highlights the complexities and strategic considerations involved in challenging major tax legislation.