M/S Abdul Parvej Khan Contractor (Trade ... vs Union Of Inida Through The Central Board ... on 22 November, 2024

Here's a summary of the judgment:

1. Outcome
The High Court allowed the batch of writ petitions, including M/S Abdul Parvej Khan Contractor. The show cause notices and assessment orders passed by the respondent (Assistant Commissioner of CGST) disallowing Input Tax Credit (ITC) were set aside. The State was reserved liberty to take appropriate action in light of the recent amendments to GST law.

2. Core Issue
The core issue was the constitutional validity and interpretation of Section 16(4) of the Central Goods and Services Tax Act, 2017 (CGST Act), which imposes a time limit for claiming Input Tax Credit (ITC), and its impact on taxpayers who filed their GSTR-3B returns belatedly for past financial years. The matter was ultimately resolved by considering the retrospective amendment to Section 16 introduced by Section 118 of the Finance Act, 2024.

3. Key Facts
* The petitioner (M/S ANAND STEEL, whose facts were taken for convenience, representing a batch of similar cases including M/S Abdul Parvej Khan Contractor) is a proprietorship firm registered under the CGST Act, 2017.
* For the financial year 2018-19, the petitioner duly filed GST returns in FORM GSTR-3B, albeit with late fees and interest, and availed ITC on inward supplies.
* Respondent No.3 (Assistant Commissioner of CGST) issued a notice under Section 73 of the CGST Act, proposing to disallow ITC for FY 2018-19 on the sole ground of late filing of GSTR-3B returns.
* Despite the petitioner's reply, the Assistant Commissioner passed an original order dated 13.02.2024 under Section 74 of the GST Act, disallowing the ITC based on the unamended Section 16(4).
* The petitions challenged this disallowance and the constitutional validity of Section 16(4).

4. Arguments
Taxpayer (Petitioner):
* Constitutional Challenge: Section 16(4) is ultra vires, violating Articles 14, 19(1)(g), and 300A of the Constitution of India, as it imposes an arbitrary restriction on the right to avail ITC.
* Arbitrariness: ITC accrues upon purchase of goods/services for business use (Section 16(1)). Disallowing it for a mere procedural lapse (late filing) is arbitrary and causes loss to taxpayers.
* Cascading Effect: The restriction on ITC offends the Government's policy of removing the cascading effect of taxes, as outlined in the Constitution (122nd Amendment) Bill, 2014.
* Double Penalty: Petitioners paid late fees and interest for delayed filing. Disallowing ITC penalizes them twice for the same default.
* Compliance with Section 16(1) & (2): The petitioner fulfilled all conditions for ITC under Section 16(1) and (2). Section 16(4) overrides Section 16(2), making the non-obstante clause in Section 16(2) meaningless.
* Legitimate Expectation: The petitioner had a legitimate expectation that the time limit for filing FORM GSTR-3 (under Section 39(1)) would govern ITC availment, and the retrospective amendment to Rule 61(5) (making GSTR-3B the return under Section 39) created panic.

Revenue (Respondent):
* The controversy has been resolved by the amendment in Section 16 of the GST Act through Section 118 of the Finance Act, 2024, which incorporated new subsections (5) and (6) retrospectively from 01.07.2017.
* Cited a Madurai Bench of Madras High Court judgment (W.P. No. 20773/2023) where a similar controversy was dealt with post-Finance Act, 2024, leading to setting aside of orders and remand.

5. Court’s Reasoning
* The Court noted that the Central Government, through Section 118 of the Finance Act, 2024, has amended Section 16 of the GST Act by inserting subsections (5) and (6), effective retrospectively from July 1, 2017.
* Section 16(5) specifically provides that, notwithstanding anything in subsection (4), for financial years 2017-18, 2018-19, 2019-20, and 2020-21, registered persons are entitled to take ITC in any return under Section 39 filed up to November 30, 2021.
* The petitioner's claim for FY 2018-19 falls squarely within the scope of this newly inserted Section 16(5), thereby "jettisoning the condition of time limit" for these specific years.
* While the Court observed that Section 16(4) appears arbitrary and capricious for imposing a double penalty (late fees/interest + ITC disallowance) for delayed filing despite tax payment, it ultimately decided to allow the petitions without examining the constitutional validity of Section 16(4).
* The decision was based on the premise that the statutory amendment introduced by the Finance Act, 2024, resolved the controversy by retrospectively relaxing the time limit for the relevant financial years.
* Thus, the impugned show cause notices and assessment orders, being contrary to the retrospectively amended law, could not stand.

6. Statutory References
* Constitution of India: Articles 14, 19(1)(g), 265, 300A.
* Central Goods and Services Tax Act, 2017 (CGST Act):
* Section 16 (Eligibility and conditions for taking ITC) – subsections (1), (2), (4), (5), (6).
* Section 29 (Cancellation of registration).
* Section 30 (Revocation of cancellation of registration).
* Section 39 (Furnishing of returns).
* Section 41 (Claim of Input Tax Credit and Provisional Acceptance thereof).
* Section 47 (Levy of late fee).
* Section 49 (Payment of tax, interest, penalty and other amounts).
* Section 50 (Interest on delayed payment of tax).
* Section 73 (Determination of tax not paid or short paid...).
* Section 74 (Determination of tax not paid or short paid ... by reason of fraud...).
* Finance Act, 2024: Section 118.
* Income Tax Act, 1961.
* Constitution (122nd Amendment) Bill, 2014.
* Rule 61(5) (of CGST Rules, implied by argument regarding GSTR-3B).

7. Precedents Cited
* MRF Ltd. Vs. Assistant Commissioner (Assessment) Sales Tax reported in 2006(206) ELT (SC) (cited by petitioner for the principle of 'legitimate expectation').
* Madras High Court in W.P. No. 20773/2023 (Madurai Bench) (cited by Revenue, for dealing with similar controversy post-Finance Act, 2024, and remanding the matter).