Section 16(4) of the CGST Act is constitutionally valid and does not violate Articles 14, 19(1)(g), or 300A of the Constitution.

ORDER :

SANJAY K. AGRAWAL, J.

1. The petitioner herein, which is a proprietorship firm registered under the provisions of the Central Goods and Services Tax Act, 2017 (for short, ‘the CGST Act’), seeks to challenge the constitutional validity of Section 16(4) of the CGST Act as violative of Articles 14, 19(1)(g) & 300A of the Constitution of India and further seeks a declaration that Section 16(4) is merely procedural in nature which cannot override substantive conditions as mandated under Sections 16(1) & 16(2) of the CGST Act, and eventually seeks to challenge the show cause notice dated 20-5-2022 (Annexure P-8) in light of Section 100 of the Finance Act, 2022 and to allow the ITC (Input Tax Credit) claimed in the month of March, 2019 and also to quash the proceedings initiated under Section 16(4) of the CGST Act by respondents No.3 to 5 herein.

2. The constitutional validity of Section 16(4) of the CGST Act has been challenged on the following factual backdrop: -

Relevant Facts

3. The petitioner is a proprietorship firm engaged in the trading of Oils and allied products thereof, registered under the provisions of the CGST Act as well as the Chhattisgarh Goods and Services Tax Act, 2017 having GSTIN: 22ACJPJ0020A1ZR and certificate of GST registration has been filed as Annexure P-1. It is further case of the petitioner that the petitioner being a trader, regularly purchases goods and avails certain services thereof in relation to the business. The petitioner being a registered firm under the specified GST Acts is required to furnish its monthly return under Section 39 of the CGST Act read with Rule 61 of the Central Goods and Services Tax Rules, 2017 (for short, ‘the CGST Rules’) in Form GSTR-3B. The petitioner for the financial year 2018-19 filed return under Section 39 of the CGST Act in Form GSTR-3B for the month of March, 2019 on 13-11-2019. Return was specifically filed for the specified period and late fees was also paid in accordance with Section 47 of the CGST Act for the period March, 2019 in Form GSTR-3B of April, 2019 and interest under Section 50 was also paid in the return for the period March, 2019. The ITC claimed in the return for the month of March, 2019 was eligible ITC for the specified period in terms of Section 16(2). Returns filed under Section 39 in Form GSTR-3B for the months of March, 2019 and April, 2019 have been annexed as Annexures P-2 & P-3. Thereafter, the petitioner was served with a demand letter dated 6-2-2020 (Annexure P-4) by respondent No.3 demanding an amount of Rs. 9,43,919/- to be paid alleging that Input Tax Credit (ITC), as specified above, is availed in contravention of Section 16(4) of the CGST Act along with interest under Section 50 of the said Act, which the petitioner replied vide Annexure P-5 and prayed for quashment of the proceedings and not to issue any further notice, but respondent No.3 again issued a demand letter dated 28-1-2021 (Annexure P-6) rejecting the grounds raised by the petitioner stating that Section 16(4) provides for condition of availing ITC and accordingly demanded the payment of wrongly availed ITC along with appropriate interest, which the petitioner again replied by Annexure P-7 that he satisfies all the requirements of Section 16(2) of the CGST Act, but not satisfied with that, the petitioner was served with a show cause notice on 26-5-2022 vide Annexure P-8 alleging that the petitioner has wrongly availed ITC for the month of March, 2019 by contravening with the provisions of Section 16(4) read with Section 39 of the CGST Act and Rule 61 of the CGST Rules. The petitioner was required to show cause as to why total goods and services tax amounting to Rs. 9,43,920/- should not be demanded and recovered from him under Section 73(1) of the CGST Act, interest at applicable rate should not be demanded and recovered under Section 50 of the said Act and penalties should not be imposed under Section 73(9) of the said Act leading to filing of the instant writ petitio