Constitutional validity of Section 16(4) of the CGST Act challenged

The Hon’ble Calcutta High Court in M/s. Jyote Motors Bengal Pvt. Ltd. v. Additional Director, Directorate General of Goods & Service Tax Intelligence [2023 (6) TMI 682 - CALCUTTA HIGH COURT] directed the Jyote Motors Bengal Pvt. Ltd ("the Petitioner”) to deposit 10 per cent of disputed tax amount within 2 weeks so that, the court can entertain the writ, also directed the Revenue Department not to take any coercive action if the payment is made within the stipulated time period.

Facts:

The Petitioner has challenged the appealable order before the Calcutta High Court challenging Section 16(4) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”).

Issue

Whether Section 16(4) of the CGST Act is constitutionally valid?

Held

The Hon’ble Calcutta High Court in 2023 (6) TMI 682 - CALCUTTA HIGH COURTheld as under:

• Observed that, the Petitioner has challenged the appealable orders which were passed by the Revenue Department dated January 19, 2023.
• Noted that, since the writ involves pure question of law i.e., the constitutional validity of Section 16(4) of the CGST Act.
• Stated that, the writ will be entertained only if the Petitioner makes payment of 10% of the disputed tax amount within two weeks.
• Directed the Revenue Department not to take any coercive action if the payment is made within the stipulated time period.
• Further, directed the Revenue Department to file an affidavit-in-opposition after the summer vacation and subsequently directed the Petitioner to file a reply to the affidavit within two weeks thereafter.
• Listed the matter for final hearing in August 2023.

Relevant provision

Section 16(4) of the CGST Act:

“(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the thirtieth day of November following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.”

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