Reversal of ITC─Late filing of Return─Applicability of section 16(4) CGST Act, 2017

OmPrakash jain

Debate on Section 16(4) of CGST Act: ITC Entitlement Despite Late Returns; Procedural Rules and Constitutional Rights The article discusses the applicability of Section 16(4) of the CGST Act, 2017, focusing on the entitlement to Input Tax Credit (ITC) despite late filing of returns. It argues that Section 16(2)(d), which starts with a notwithstanding clause, allows for ITC entitlement even if returns are filed or rectified belatedly. The author contends that procedural rules cannot override this entitlement, and the government's retention of ITC is unconstitutional under Article 265. The piece criticizes the government's revenue-oriented approach, which leads to increased litigation and public harassment, and emphasizes that ITC is a vested right under Article 300A. (AI Summary)

Section 16(2)(d) , CGST Act, 2017 starts with notwithstanding clause and stipulates “furnishing of return u/s 39 for entitlement of ITC”. This clause nowhere mentions “timely submission of returns and/or debarring rectification of any return belatedly, for being entitled to avail ITC. The “notwithstanding clause”, in the section 16(2) means that it supersedes[1] all the sub-sections of section 16.

As such, in our view, if a registered person has furnished returns &/or rectified any return belatedly, he is entitled to ITC irrespective of section 16(4)CGST Act, 2017 and his vested right[2] can not be withdrawn in the absence of a clear legal prohibition, by framing rules.

Rules are procedural in nature and can not be construed as a mandatory provisions[3]. The Govt. has no legal authority to retain the amount of credit to which the respondent in the present case is entitled to and retention of it by the Govt., cannot be sustained, being violative of Article 265 of the Constitution of India [4].

In view of the above, in our view, ITC is not required to be reversed.

CA Om Prakash Jain

Jaipur

9414300730

[email protected]

[1]. ASSISTANT COMMERCIAL TAXES OFFICER, BHILWARA VERSUS LAXMIMISTHANBHANDAR [1988 (4) TMI 418 - RAJASTHAN HIGH COURT]

[2]. EICHER MOTORS LTD. VERSUS UNION OF INDIA [1999 (1) TMI 34 - SUPREME COURT]

[3]. ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. [2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT]

UNION OF INDIA & ORS. VERSUS ADFERT TECHNOLOGIES PVT. LTD. [2020 (3) TMI 188 - SC ORDER]

[4] .JAKAP METIND PVT LTD. VERSUS UNION OF INDIA THROUGH THE SECRETARY AND 6 OTHER (S) [2019 (11) TMI 710 - GUJARAT HIGH COURT]

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