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

The Hon’ble Andhra Pradesh High Court in Thirumalakonda Plywoods v. The Assistant Commissioner [W.P.No.24235 of 2022 dated July 18, 2023] has held that, mere acceptance of GSTR-3B returns with late fee will not exonerate the delay in claiming Input Tax Credit beyond the period specified under section 16(4) of the Central Goods and Services Tax Act, 2017.

Facts:

Petitioner is a sole proprietorship doing business in hardware and plywood with the trade name "Tirumalakonda Plywoods" commenced during Covid-19 pandemic and registered under APGST Act and CGST Act during March, 2020.

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.

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.

Hence the writ petition.

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?

Held:

The Hon’ble Andhra Pradesh High Court in W.P.No.24235 of 2022 held that:

• 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.

Editor’s Comments:

The Hon’ble Andhra Pradesh High Court has held that the ITC is a mere concession/rebate/benefit but not a statutory or constitutional right and therefore imposing conditions including time limitation for availing the said concession will not amount to violation of constitution or any statute. Also that the operative spheres of Section (16) and constitutional provisions under Article 14, 19(1)(g) and 300-A are different and hence infringement does not arise.

Importantly, The Hon’ble Andhra Pradesh High Court has not struck down any central law. Therefore, the judgement is prima facie binding in Andhra Pradesh only. In other states, it only has a persuasive value as several writ petitions are pending in various High Courts of other states.