JUDGMENT :

A.S. SUPEHIA, J.

1. Since a common issue is involved in all the group petitions, Special Civil Application No.18080 of 2023 is taken up as a lead matter.

2. In this group of petitions, we are called upon to examine the vires of the provision of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (for short, “the CGST Act”).

3. It is the case of the petitioners that the provision of Section 16(2)(c) of the CGST Act is arbitrary, ultra vires and violative of Articles 14, 19(1)(g), 265, and 300A of the Constitution of India. In the alternative, it is prayed that the said provision be read down so as to apply only to such transactions that are found to be fraudulent, collusive or involving connivance between the purchasing dealer and the supplier, thereby excluding those purchasers, who have acted bona fide.

4. The entire case of the petitioners’ hinges on a sole aspect, namely the default of the supplier in depositing the tax so collected with the government. As a consequence, Input Tax Credit (ITC) is denied to purchasers like the petitioners.

5. Various submissions have been advanced by the learned advocates appearing for the petitioners. Numerous decisions of other High Courts as well as of the Supreme Court have been cited before us, however, since the case law cited is either repetitive or out of context, and in order to avoid prolixity, we are not dealing with the same. It is also clarified that this Court has not examined the merits of individual matters and the present judgment and order is confined only to the examination of the vires of Section 16(2)(c) of the CGST Act.

SUBMISSIONS ON BEHALF OF THE PETITIONERS :

6. The relevant submissions touching upon the issue are incorporated as under:-

7. Reference is made to Sections 16 to 21 read with Section 41, Section 49, Section 53 of the CGST Act and the Central Goods and Service Tax Rules, 2017 (for short, “the CGST Rules, 2017”) (in particular Rules 36, 37, 37A, 59, 60, 86 and 86B) and Chapter VI of the CGST Rules, 2017 which prescribes a purely mechanical, GSTIN-linked, form-driven process: the supplier files his statement of outward supplies in Form GSTR-1 (Section 37 of the CGST Act r.w. Rule 59 of the CGST Rules, 2017); the purchasing dealer's inward supply details get auto- populated in Form GSTR-2A and the Input Tax Credit statement in Form GSTR-2B (Section 38 of the CGST Act r.w. Rule 60 of the CGST Rules, 2017); and the purchasing dealer's ITC claim is restricted to, and communicated entirely on the basis of, what the supplier has filed. The purchasing dealer has no statutory, contractual or factual means of verifying the supplier's Form GSTR-3B, the actual payment of tax, or the utilisation of ITC by the supplier.

8. It is submitted that sub-section (2) of Section 16 of the CGST Act is a composite provision which lays down, in a specific sequence, six distinct conditions in clauses (a), (aa), (b), (ba), (c) and (d), each of which must be cumulatively satisfied before a registered person becomes entitled to take ITC. On a plain reading, clause (a) requires the recipient to be in possession of a tax invoice or debit note issued by a registered supplier; clause (aa) requires the details of such invoice or debit note to have been furnished by the supplier in his statement of outward supplies and communicated to the recipient; clause (b) requires the recipient to have actually received the goods or services, or both; clause (ba) requires that the details of input tax credit in respect of the said supply communicated to such registered person under Section 38 of the CGST Act, have not been restricted; clause (c) requires that, subject to Section 41 of the CGST Act, the tax charged in respect of such supply has been actually paid to the Government; and clause (d) requires that the recipient has furnished the return under Section 39 of the CGST Act. It is thus contended that the six conditions are not only cumulative but have been deliberately arrayed by Par