Propcare Mall Management (India) Pvt ... vs The Deputy Commissioner Of on 28 October, 2025

Judgment Summary: Propcare Mall Management (India) Pvt Ltd vs The Deputy Commissioner of Commercial Taxes

1. Outcome

The writ petition was disposed of in favour of the Petitioner. The High Court quashed the impugned order dated 16.03.2024, which had denied Input Tax Credit (ITC) to the petitioner. The matter was remanded back to the adjudicating authority to be re-decided from the show-cause notice stage, with a specific direction to apply the newly inserted Section 16(5) of the GST Acts. The petitioner's other legal challenges were kept open.

2. Core Issue

The central issue was the denial of Input Tax Credit (ITC) to the petitioner for the financial year 2018-19. The denial was based on the grounds that the petitioner had filed its GSTR-3B returns after the deadline stipulated under Section 16(4) of the CGST/KGST Act, 2017.

While the petitioner challenged the constitutional validity of Section 16(4) itself, the case was ultimately decided on the applicability of a new, overriding provision, Section 16(5), which was introduced retrospectively by the Finance (No.2) Act, 2024. This new section extended the time limit for availing ITC for the financial years 2017-18 to 2020-21.

3. Key Facts

• Petitioner: Propcare Mall Management (India) Pvt. Ltd.
• Tax Period: April 2018 to March 2019.
• The petitioner had delayed filing its GSTR-3B returns for the months of December 2018 to March 2019.
• Citing the time bar under Section 16(4), the tax authority issued an order on 16.03.2024 denying the ITC availed in these late-filed returns.
• The petitioner had previously reversed ITC of Rs. 1,81,43,860/- on 05.03.2022 via Form GST DRC-03 and sought a refund of this amount.
• The petitioner filed a writ petition challenging the order and also challenged the constitutionality of Section 16(4) and a retrospective amendment to Rule 61(5) of the GST Rules.
• During the pendency of the petition, "The Finance (No.2) Act, 2024" was enacted, inserting a new sub-section (5) to Section 16 of the CGST Act.

4. Arguments

• Petitioner's Arguments:

  • The denial of ITC based solely on the procedural time limit in Section 16(4) is unconstitutional and arbitrary, especially when the substantive conditions under Sections 16(1) and 16(2) (i.e., receipt of goods/services and payment of tax to the vendor) were fulfilled.
  • The retrospective amendment to Rule 61(5) of the GST Rules is unconstitutional.
  • The newly inserted Section 16(5) provides a specific extension for availing ITC for the financial year 2018-19, making the petitioner eligible for the credit.
  • The reversed ITC amount should be refunded.

• Respondents' (Revenue) Arguments:

  • The Respondents fairly conceded that the newly inserted Section 16(5) of the CGST Act, introduced via The Finance (No.2) Act, 2024, was applicable.
  • They agreed that this provision extended the time limit for availing ITC for the relevant period up to November 30, 2021, and the matter could be disposed of on this basis.

5. Court’s Reasoning

• The Court did not adjudicate on the constitutional validity of Section 16(4) or the amendments to Rule 61(5), keeping these questions of law open.
• The Court's decision was based entirely on a binding precedent, noting that the issue was "directly and squarely covered" by its earlier judgment in the case of M/s. Sadhana Enviro Engineering Services.
• The reasoning relies on the newly enacted Section 16(5) of the CGST Act. This provision, inserted with retrospective effect from July 1, 2017, explicitly allows registered persons to claim ITC for supplies pertaining to FY 2017-18, 2018-19, 2019-20, and 2020-21 in any return filed up to November 30, 2021.
• Since the tax period in dispute (FY 2018-19) is covered by this new provision, the original ground for denial of ITC (the time limit under Section 16(4)) is effectively superseded.
• Therefore, the Court found it appropriate to quash the impugned order and remand the matter to the authority for fresh consideration in light of this beneficial legislative amendment. The decision regarding the refund of the reversed ITC was also left to the authority to decide during the fresh proceedings.

6. Statutory References

• Central Goods and Services Tax Act, 2017 (CGST Act):
  • Section 16(4): The time limit for availing ITC.
  • Section 16(5): (As inserted by Finance (No.2) Act, 2024) - The new provision extending the ITC deadline for FYs 2017-18 to 2020-21.
  • Section 73: Determination of tax.
• Karnataka Goods and Services Tax Act, 2017 (KGST Act): Corresponding provisions to the CGST Act.
• Central Goods and Services Tax Rules, 2017:
  • Rule 61(5): Retrospective amendment challenged by the petitioner.
  • Rule 142(5): Relating to the summary of order in Form GST DRC-07.
• The Finance (No.2) Act, 2024:
  • Section 118: The provision that inserted Section 16(5) into the CGST Act.
• Constitution of India:
  • Article 226: Power of High Courts to issue certain writs.

7. Precedents Cited

• M/s. Sadhana Enviro Engineering Services vs. Joint Commissioner of Central Tax & others (W.P.No.6138/2020, dated 03.09.2024). This judgment of the same court was the sole basis for the decision, as the facts and legal issue were found to be identical.