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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
U. Durga Prasad Rao, T. Mallikarjuna Rao, JJ.
Thirumalakonda Plywoods - Petitioner
Versus
The Assistant Commissioner – State Tax and others - Respondents
W.P.No.24235 of 2022
Decided On : 18-07-2023
GST - ITC - Time limit - Section 16(4) of APGST Act and Section 16(4) of CGST Act, 2017 - Constitutional validity - Non-obstante clause in Section16(2) of APGST/CGST Act, 2017 - Extension of time for filing returns - Notification issued by Government of Andhra Pradesh - Arbitrary, illegal and violative of Article 14 of Constitution of India - Action of Respondent in passing summary order - Violative of principles of natural justice - Arbitrary, improper, illegal and violative of Article 14, 19(1)(g), 20, 21 and 300-A of Constitution of India - Held, time limit prescribed for claiming ITC U/s 16(4) of APGST Act/CGST Act, 2017 is not violative of Articles 14, 19(1)(g) and 300-A of the Constitution of India - Section 16(2) of APGST/CGST Act, 2017 has no overriding effect on Section 16(4) of the said Act as both are not contradictory with each other - Mere acceptance of Form GSTR-3B returns with late fee will not exonerate the delay in claiming ITC beyond the period specified U/s 16(4) of APGST/CGST Act, 2017.
Fact of the Case:
Petitioner, a sole proprietorship doing business in hardware and plywood, received an email dated 16.12.2021 U/s 74(1) of SGST /CGST Act r/w Section 20 of IGST Act, 2017 by the 1st respondent stating that the petitioner availed input for March, 2020 and sought reply in the light of Gazette notification of CCT’s Ref.No.CCW/GST20015-A, dt; 30.0.6.2017. Though the above notice was sent through a private gmail ID and not following the procedure under rule 142 (1) of APGST Rules, 2017 and not served through its GST common portal or specified any time for reply as per Form GST DRC-01, still the petitioner submitted reply through e-mail dated 17.01.2022 with its Form GST DRC-06 and enclosed Annexure-I wherein the petitioner sought an opportunity U/s 74(5) of APGST Act, 2017, since the petitioner not only discharged late fee for delay in filing the return but also challenged notice with his detailed submissions. Instead of considering petitioner’s reply in Form GST DRC 06, the 1st respondent surprisingly sent a personal hearing notice dated 22.02.2022 through private e-mail ID stating that the petitioner did not file reply against their notice nor opted for personal hearing and hence he has to file reply on or before 22.02.2022 and attend personal hearing on 02.03.2022. Against the above notice, the petitioner through his advocate confirmed that he already filed his reply dated 17.01.2022. Subsequently the petitioner received e-mail dated 14.03.2022 sent by the 1st respondent along with an attachment containing order vide AOO No.ZH370322OD48625, dated 14.03.2022 whereunder, without considering the objections raised by the petitioner in his reply, the 1st respondent wrongly held as if the petitioner made an irregular claim of ITC of an amount of Rs.4,78,626/-and fixed Rs.11,24,994/-towards tax, penalty and interest.
Finding of the Court:
The time limit prescribed for claiming ITC U/s 16(4) of APGST Act/CGST Act, 2017 is not violative of Articles 14, 19(1)(g) and 300-A of the Constitution of India. Section 16(2) of APGST/CGST Act, 2017 has no overriding effect on Section 16(4) of the said Act as both are not contradictory with each other. They will operate independently. Mere acceptance of Form GSTR-3B returns with late fee will not exonerate the delay in claiming ITC beyond the period specified U/s 16(4) of APGST/CGST Act, 2017.
Issues: Whether by virtue of imposition of time limit for claiming Input Tax Credit (ITC), Section 16(4) of the APGST Act and CGST Act, 2017 violated Article 14, 19(1)(g) and 300A of the Constitution of India and thereby, liable to be struck down? Whether Section 16(2) of the APGST / CGST Act, 2017 would prevail over 16(4) of APGST / CGST Act, 2017 and thereby if the conditions laid down in Section 16(2) of the APGST / CGST Act, 2017 are fulfilled, the time limit prescribed under Section 16(4) of the APGST / CGST Act, 2017 for claiming ITC will pale into insignificance? Whether the acceptance of Form GSTR-3B returns of March 2020 filed on 27.11.2020 by the petitioner with a late fee of Rs.10,000/- will exonerate the delay in claiming the ITC beyond the period specified under Section 16(4) of the APGST / CGST Act, 2017? Whether summary of the order dated 15.03.2022 under Form GST DRC-07 issued by the 1st respondent is vitiated by the non-serving of show cause notice under Form GST DRC-01 as per the procedure?
Ratio Decidendi: ITC being a concession/benefit/rebate, the legislature is within its competency to impose certain conditions, including time prescription for availing such right and the same cannot be challenged on the ground of violation of Constitutional provisions.
Final Decision: Writ petition is dismissed.
ORDER :
U. Durga Prasad Rao, J.
The petitioner prays for writ of mandamus declaring
(b) That the non-obstante clause in Section16(2) of APGST/CGST Act, 2017 would prevail over Section 16(4) of APGST / CGST Act, 2017.
(c) That notification issued by Government of Andhra Pradesh vide G.O.Ms.No.264, dated 11.09.2020 and providing extension of time for filing returns only to the non-resident and not allowing such extension to the others and thereby distinguishing other tax payers on account of COVID-19 pandemic is arbitrary, illegal and violative of Article 14 of Constitution of India.
(d) That the action of Respondent No.1 in passing summary order vide ref No.ZD370322002865K, dated 15.3.2022 in Form GST DRC-07 under the GST Acts, without serving proper show cause notice in Form GST DRC-01 and granting sufficient opportunity to the petitioner U/s 74(5) of the Act and not considering petitioner’s submissions and COVID19 limitations r/w Amnesty Notifications but confirming the demand of tax, interest and penalty by restricting the credit with erroneous facts in spite of collection of late fee of Rs.10,000/-for the delay for filing the returns is not only violative of principles of natural justice but also arbitrary, improper, illegal and violative of Article 14, 19(1)(g), 20, 21 and 300-A of Constitution of India and consequently set aside the summary order / proceedings of the 1st respondent as null and void and pass such other order deemed fit in the circumstances of the case.
2. Petitioner’s case briefly is thus:
(b) While so, petitioner received email dated 16.12.2021 U/s 74(1) of SGST /CGST Act r/w Section 20 of IGST Act, 2017 by the 1st respondent stating that the petitioner availed input for March, 2020 and sought reply in the light of Gazette notification of CCT’s Ref.No.CCW/GST20015-A, dt; 30.0.6.2017.
(c) Though the above notice was sent through a private gmail ID and not following the procedure under rule 142 (1) of APGST Rules, 2017 and not served through its GST common portal or specified any time for reply as per Form GST DRC-01, still the petitioner submitted reply through e-mail dated 17.01.2022 with its Form GST DRC-06 and enclosed Annexure-I wherein the petitioner sought an opportunity U/s 74(5) of APGST Act, 2017, since the petitioner not only discharged late fee for delay in filing the return but also challenged notice with his detailed submissions.
(d) Instead of considering petitioner’s reply in Form GST DRC 06, the 1st respondent surprisingly sent a personal hearing notice dated 22.02.2022 through private e-mail ID stating that the petitioner did not file reply against their notice nor opted for personal hearing and hence he has to file reply on or before 22.02.2022 and attend personal hearing on 02.03.2022.
(e) Against the above notice, the petitioner through his advocate confirmed that he already filed his reply dated 17.01.2022.
(f) Subsequently the petitioner received e-mail dated 14.03.2022 sent by the 1st respondent along with an attachment containing order vide AOO No.ZH370322OD48625, dated 14.03.2022 whereunder, without considering the objections raised by the petitioner in his reply, the 1st respondent wrongly held as if the petitioner made an irregular claim of ITC of an amount of Rs.4,78,626/-and fixed Rs.11,24,994/-towards tax, penalty and interest.
Hence the writ petition.
3. 1st respondent filed counter contending thus:
Input Tax Credit (ITC) is a concession/benefit/rebate and the legislature is within its competency to impose certain conditions, including time prescription for availing such right.
Input Tax Credit under GST is a conditional right, contingent on actual tax payment by suppliers, and Sections 16(2)(c) and 16(4) are constitutionally valid restricting eligibility based on complianc....
Input Tax Credit under GST is a concession, not an absolute right, subject to conditions including actual tax payment by suppliers and adherence to filing deadlines.
The requirement to submit TRAN-1 for claiming transitional credit under Section 140 of the CGST Act, 2017 is mandatory and cannot be bypassed.
The main legal point established in the judgment is the application of Section 16(4) of the CGST Act in the context of the petitioner's late filing of return and the reversal of Input Tax Credit (ITC....
The court holds that distribution of Input Tax Credit must comply with eligibility conditions under Section 16 of the CGST Act, reinforcing that arbitrary distribution timelines are invalid.
The main legal point established in the judgment is the interpretation and application of Section 140[5] of the CGST Act, 2017, and the use of the General Clauses Act, 1897 to calculate the period of....
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