www.taxguru.

in

2024:KER:37752

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 31559 OF 2019

PETITIONER:

M/S M.TRADE LINKS

FA TOWER, K.K.ROAD,KADAVANTHRA, ERNAKULAM, REPRESENTED BY
NIYAS AHAMMED, MANAGING PARTNER.
BY ADVS.
SMT.MEERA V.MENON

RESPONDENTS:

1 UNION OF INDIA
REPRESENTED BY SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI-110001.
2 CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS,
GST POLICY WING, NORTH BLOCK, NEW DELHI-110001, REPRESENTED
BY PRINCIPAL COMMISSIONER (GST).
3 STATE OF KERALA,
REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPT., GOVT.
SECRETARIAT, THIRUVANANTHAPURAM-695001.
BY ADV SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE &
CUSTOMS

SRI. MUHAMED RAFIQ-SPL.GP, SRI.P.R. SREEJITH -SC, GSTN,

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08.11.2023,

ALONG WITH WP(C).5995/2022, 21545/2022 AND CONNECTED CASES, THE COURT ON
04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 25891 OF 2020
PETITIONER:
PUTHANANGADI INDUSTRIES
VI/70, INDUSTRIAL DEVELOPMENT PLOT, CHAMBANNOOR P.O.,
ANGAMALI, ERNAKULAM-683573, REPRESENTED BY ITS MANAGING
PARTNER TITTO THOMAS.
BY ADVS.
K.P.PRADEEP
SHRI.HAREESH M.R.
SRI.T.T.BIJU
SMT.T.THASMI

RESPONDENTS:
1 THE STATE OF KERALA
REPRESENTED BY ITS SECRETARY(TAXES), GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM, KERALA-695001.
2 COMMISSIONER OF KERALA STATE GST,
KERALA STATE GST DEPARTMENT, TAX TOWERS, KILLIPALAM,
KARAMANA P.O., THIRUVANANTHAPURAM, KERALA-695002.
3 STATE TAX OFFICER,
ANGAMALY, KERALA STATE GOODS AND SERVICE TAX DEPARTMENT,
ANGAMALY P.O., ERNAKULAM-683572.
4 CHIEF COMMISSIONER OF CENTRAL TAXES,
((CGST) AND CENTRAL EXCISE), CENTRAL REVENUE BUILDINGS,
I.S.PRESS ROAD, COCHIN, ERNAKULAM-682018.
5 GOODS AND SERVICE TAX COUNCIL,
GOVERNMENT OF INDIA, OFFICE OF THE GST COUNCIL
SECRETARIAT, 5TH FLOOR, TOWER II, JEEVAN BHARTI
BUILDING, JANPATH ROAD, CONNAUGHT PLACE, NEW DELHI-
110001, REPRESENTED BY ITS ADDITIONAL SECRETARY.
6 GOODS AND SERVICES TAX NETWORK,
EAST WING, 4TH FLOOR, WORLD MARK-1, AEROCITY, NEW DELHI-
110037, REPRESENTED BY ITS CHIEF EXECUTIVE OFFICER.
7 UNION OF INDIA,
REPRESENTED BY ITS SECRETARY, DEPARTMENT OF REVENUE,
MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK,
NEW DELHI-110001.
8 CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS-DEPARTMENT
OF REVENUE,
MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK,
NEW DELHI-110001, REPRESENTED BY ITS CHAIRMAN.
9 MR.LIJU JOSE,
ANNA PLASTICS, 10/585 A, THATHAPILLY, MANNAM, NORTH
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

PARAVUR, ERNAKULAM-683520.
BY ADVS.
SRI.P.R.SREEJITH, SC, CENTRAL BOARD OF EXCISE AND
CUSTOMS
ADV SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE
& CUSTOMS

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 26515 OF 2021
PETITIONER:

MKHK TECHSTREAM PRIVATE LIMITED

1ST FLOOR. 1/3459 Q M.T.I COMPLEX, KANNUR ROAAD,
WESTHILL, KOZHIKODE-673 005 .REPRESENTED BY ITS MANAGING
DIRECTOR, HARIS IBRAHIM
BY ADVS.
K.P.ABDUL AZEES
AKHIL SURESH
T.ARCHANA

RESPONDENTS:

1 INFINITE TECHNOLOGY SOLUTIONS

MERLIN INFINITE, 10TH FLOOR, PLOT NO 51, BLOCK DN,
SECTOR-V, BIDHAANAGAR, IN THE DISTRICT OF NORTH 24
PARGANAS WITHIN STATIONS ELECTRONICS COMPLEX SALT LAKE
CITY, KOLKATTA-700091
2 UNION OF INDIA
REPRESENTED BY REVENUE SECRETARY, NORTH BLOCK, NEW
DELHI-110 001
3 CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS,
DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NEW DELHI-
110 001
4 STATE OF KERALA,
REPRESENTED BY SECRETARY, TAXES DEPARTMENT, GOVERNMENT
SECRETARIAT, THIRUVANANTHAPURAM -695 001.
5 STATE TAX OFFICER,
1ST CIRCLE, STATE GST COMPLEX, KOZHIKODE-673 004
BY ADVS.
SRI. MUHAMED RAFIQ-SPL.GP
ADV SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE
& CUSTOMS.

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 5995 OF 2022
PETITIONER:

M/S.LALUKKAS MOBILES
VI/1227, PAMPADY, KOTTAYAM - 686502, REPRESENTED BY ITS
PROPRIETOR, SRI. BYJOO PUTHANPARAMPIL SUKUMARAN.
BY ADVS.
AJI V.DEV
ALAN PRIYADARSHI DEV
S.SAJEEVAN

RESPONDENTS:

1 THE ASSISTANT COMMISSIONER

STATE GOODS & SERVICES TAX DEPARTMENT, 2ND CIRCLE,
KOTTAYAM - 686001.
2 UNION OF INDIA
REPRESENTED BY ITS SECRETARY (REVENUE), MINISTRY OF
FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK, NEW DELHI -
110001.
3 THE CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS
REPRESENTED BY ITS CHAIRMAN, DEPARTMENT OF REVENUE,
NORTH BLOCK, NEW DELHI - 110001.
4 THE STATE OF KERALA
REPRESENTED BY ITS SECRETARY TAXES, SECRETARIAT,
THIRUVANANTHAPURAM - 695001.
BY ADV SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE
& CUSTOMS
SRI. MUHAMED RAFIQ-SPL.GP, SRI.P.R. SREEJITH -SC, GSTN,

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT

THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH

TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946

WP(C) NO. 21545 OF 2022

PETITIONER:
M/S. ULTRAPRIME CEMENTS INDIA PVT. LTD.,
23/22-B, PATTASSERIL, BHS ROAD, TRIPUNITHURA - 682 301,
ERNAKULAM DISTRICT, REPRESENTED BY ITS MANAGING DIRECTOR
ARUN JIMMY.
BY ADV TOMSON T.EMMANUEL

RESPONDENTS:
1 CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS ,
MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NEW DELHI -
110 023, REPRESENTED BY ITS UNDER SECRETARY.
2 STATE OF KERALA
REPRESENTED BY ITS SECRETARY, DEPARTMENT OF TAXES,
SECRETARIAT, THIRUVANANTHAPURAM - 695 001.
3 COMMISSIONER OF STATE TAX
STATE GOODS AND SERVICE TAX DEPARTMENT, 9TH FLOOR, TAX
TOWER, KILLIPALAM, KARAMANA P.O., THIRUVANANTHAPURAM - 695
001.
4 STATE TAX OFFICER
STATE GST DEPARTMENT, 1ST CIRCLE, THRIPUNITHURA - 682 301.
5 THE COMMISSIONER OF CUSTOMS (IMPORTS)
OFFICE OF THE COMMISSIONER OF CUSTOMS, CUSTOM HOUSE,
WILLINGTON ISLAND, COCHIN - 682 009.
6 THE DEPUTY COMMISSIONER
CUSTOM HOUSE, WILLINGTON ISLAND, COCHIN - 682 009.
7 THE DIRECTOR(ICD)
CENTRAL BOARD OF EXCISE AND CUSTOMS, ROOM NO.49, NORTH
BLOCK, NEW DELHI.
BY ADV SMT.PREETHA S. NAIR, SC, CENTRAL BOARD OF EXCISE
AND CUSTOMS
ADV SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE &
CUSTOMS.
SRI. MUHAMED RAFIQ-SPL.GP

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 27854 OF 2022
PETITIONER:

YOHANAN THYPARAMPIL EASOW,

VI/445, THYPARAMBIL HOUSE, KEEKOZHUR, PIN - 689672
BY ADVS.
K.S.HARIHARAN NAIR
HARIMA HARIHARAN
G.REMADEVI
RAJATH R NATH

RESPONDENTS:

1 STATE TAX OFFICER,

OFFICE OF THE STATE TAX OFFICER (WC), SGST DEPT, MINI
CIVIL STATION, PATHANAMTHITTA, PIN - 689645
2 UNION OF INDIA
REPRESENTED BY SECRETARY, DEPARTMENT OF REVENUE,
MINISTRY OF FINANCE, GOVERNMENT OF INDIA, NORTH BLOCK,
NEW DELHI, PIN - 110001
BY ADV SREEJITH P. R, SC, GSTN
SRI. MUHAMED RAFIQ-SPL.GP

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 24327 OF 2022
PETITIONER/S:

P.J. GEORGE( PROPRIETOR)

M/S JANATHA AGENCIES, ALAPPATT PALATHINGAL HOUSE,
IRINJALAKKUDE, THRISSUR., PIN - 680121
BY ADV P.N.DAMODARAN NAMBOODIRI

RESPONDENTS:

1 UNION OF INDIA
REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE,
DEPARTMENT OF REVENUE, NEW DELHI., PIN - 110023
2 STATE OF KERALA
REPRESENTED BY ITS SECRETARY, DEPARTMENT OF TAXES,
SECRETARIAT, THIRUVANATHAPURAM., PIN - 695001
3 COMMISSIONER
STATE GOODS AND SERVICE TAX DEPARTMENT,9TH FLOOR, TAX
TOWER, KILLIPALAM, KARAMANA, P.O., THIRUVANATHAPURAM,
PIN - 695001
4 STATE TAX OFFICER
STATE GST DEPARTMENT, O/O STATE GOODS AND SERVICES TAX
DEPARTMENT, IRINJALAKUDA, THRISSUR, PIN - 680121
BY ADV MALINI K. MENON, CGC
SRI. MUHAMED RAFIQ-SPL.GP

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 36612 OF 2022
PETITIONER:

SALAHUDHEEN
KAPPAKASSERIL STORES, NEAR PARK JUNCTION, KAYAMKULAM -
690502, ALAPPUZHA DISTRICT., PIN - 690502
BY ADV A.KRISHNAN

RESPONDENTS:

1 STATE TAX OFFICER

STATE GOODS & SERVICE TAX DEPARTMENT, MINI CIVIL
STATION, KAYAMKULAM, ALAPPUZHA DISTRICT, PIN - 690502
2 JOINT COMMISSIONER APPEALS II
STATE GOODS & SERVICE TAX DEPARTMENT, KOLLAM, PIN -
691002
3 UNION OF INDIA
REPRESENTED BY SECRETARY TO GOVERNMENT, MINISTRY OF
FINANCE (DEPARTMENT OF REVENUE), NORTH BLOCK, NEW DELHI,
PIN - 110001
4 CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS,
GST POLICY WING, NORTH BLOCK, NEW DELHI - 110 001,
REPRESENTED BY PRINCIPAL COMMISSIONER (GST), PIN -
110001
5 STATE OF KERALA
REPRESENTED BY SECRETARY TO GOVERNMENT, TAXES DEPT.,
GOVT. SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
BY ADVS.
SRI. MUHAMED RAFIQ-SPL.GP
SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE &
CUSTOMS

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

10

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 24677 OF 2023
PETITIONER:

CHALLIYIL VIJAYAN SHAN

II, 568, PARAMBIKKULANGARA, METHALA, THRISSUR, PIN -
680669
BY ADVS.
K.N.SREEKUMARAN
P.J.ANILKUMAR (A-1768)
N.SANTHOSHKUMAR

RESPONDENTS:

1 ASSISTANT COMMISSIONER (WC & LT)

WORKS CONTRACT, STATE GOODS & SERVICE TAX DEPARTMENT
POOTHOLE, THRISSUR, PIN - 680004
2 DEPUTY COMMISSIONER
ARREAR RECOVERY, TAX PAYER SERVICES, STATE GOODS &
SERVICE TAX DEPARTMENT, POOTHOLE, THRISSUR, PIN - 680004
3 COMMISSIONER OF STATE GOODS & SERVICE TAX DEPARTMENT
TAX TOWER, 9TH FLOOR, KILLIPPALAM, KARAMANA-P.O,
THIRUVANANTHAPURAM-, PIN - 695002
4 STATE OF KERALA REPRESENTED BY ADDITIONAL CHIEF
SECRETARY (TAXES)
GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
5 UNION OF INDIA, REPRESENTED BY ITS SECRETARY
DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, GOVERNMENT
OF INDIA, NORTH BLOCK, NEW DELHI, PIN - 110001
SRI. MUHAMED RAFIQ-SPL.GP

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON

08.11.2023, ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE
COURT ON 04.06.2024 DELIVERED THE FOLLOWING:
 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

11

IN THE HIGH COURT OF KERALA AT ERNAKULAM

PRESENT
THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH
TUESDAY, THE 4TH DAY OF JUNE 2024 / 14TH JYAISHTA, 1946
WP(C) NO. 37039 OF 2023
PETITIONER/S:

M/S. MALL OF JOY PVT LIMITED,

AGED 42 YEARS
9/590-39 NEAR SAKTHAN STAND THRISSUR REPRESENTED BY ITS'
DIRECTOR, SHRI. TENSON. T.T, PIN - 680001
BY ADVS.
A.KUMAR
P.J.ANILKUMAR
G.MINI(1748)
P.S.SREE PRASAD

RESPONDENTS:

1 UNION OF INDIA
THROUGH ITS SECRETARY (REVENUE), MINISTRY OF FINANCE,
DEPARTMENT OF REVENUE,GOVERNMENT OF INDIA, NORTH BLOCK,
NEW DELHI G.P.O., PIN - 110001
2 STATE OF KERALA,
REPRESENTED BY ITS SECRETARY (TAXES), DEPARTMENT OF
FINANCE, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM, PIN
- 695001
3 ASSISTANT COMMISSIONER
OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL TAX AND
CENTRAL EXCISE THRISSUR DIVISION, THRISSUR, PIN - 680021
4 THE SUPERINTENDENT,
CENTRAL TAX AND CENTRAL EXCISE THRISSUR DIVISION,
THRISSUR, PIN - 680021
BY ADVS.
SRI. MUHAMED RAFIQ-SPL.GP
ADV SREELAL N. WARRIER, SC, CENTRAL BOARD OF EXCISE
& CUSTOMS.

THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08.11.2023,

ALONG WITH WP(C).31559/2019 AND CONNECTED CASES, THE COURT ON

04.06.2024 DELIVERED THE FOLLOWING:

 www.taxguru.in

W.P(C) Nos. 31559/2019, 25891/2020, 26515/2021,5995/2022, 2024:KER:37752

21545/2022, 27854/2022, 24327/2022, 36612/2022, 24677/2023, 37039/2023

12

JUDGMENT ‘CR’
[W.P(C) Nos. 31559/2019, 25891/2020,
26515/2021,5995/2022,21545/2022,
27854/2022, 24327/2022, 36612/2022,
24677/2023, 37039/2023]

In the present batch of writ petitions, challenge has been

made to Sections 16(2)(c) and 16(4) of the Central Goods and

Services Tax Act and State Goods and Services Act, 2017.

Background:

2. It took 13 long years, i.e., 2004-2017, for Goods and

Services Tax to finally arrive in India, and a new tax regime could

see the light of the day with effect from 01.07.2017. The Kelkar

Committee used the word ‘GST’ for the first time in a formal

document, i.e., the Executive Summary of the Kelkar Committee

report. The Kelkar Committee proposed that the Union and the

States should concurrently tax the consumption of almost all goods

and services in the economy, and it should be based on the

principles of Value Added Tax (for short ‘the VAT’). All existing

legislation taxing goods and services with cascading effects should

be withdrawn. The GST would subsume existing indirect taxes

including central excise and service tax.

2.1 ‘A White Paper on State-Level Value Added Tax’ (‘the

white paper’) was published by the Empowered Committee of the

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13

State Finance Ministers on 17.01.2005. The ‘White Paper’

discussed features such as Input Tax Credit (‘the ITC’ for short),

multiplicity of rates and taxes, etc., and provides uniform taxes

and rates. In the budget speech for the Financial Year 2006-2007,

the then Finance Minister announced a large consensus on a

national goods and services tax. An empowered committee was

constituted to prepare a road map for a National GST. In the

budget speech of the Union Finance Minister 2009-2010, GST was

considered as a dual tax structure consisting of central GST and

State GST, legislated and administrated by the Central and States,

respectively.

3. The 13th Finance Commission also made

recommendations on Central and State GST. The Commission on

Central – State Relations 2010, headed by former Chief Justice of

India, Madan Mohan Punchi J, broadly agreed with the suggestions

and the recommendations of the 13th Finance Commission. The

Central-State relation Commission recommended the concurrent

levy of dual GST by the Central and the States on a common tax

base.

4. The Constitution (115th Amendment) Bill 2011 was

introduced in the Lok Sabha to provide the legal and constitutional

structure for rolling out GST and empower the Central and States

to levy dual GST on a common tax base. However, before the

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14

Standing Committee report could be considered, the 15 th Lok

Sabha was dissolved, and the Bill lapsed.

5. The second attempt was made by introducing the 122 nd

Amendment Bill in 2014, the said Bill was passed on 08.08.2016,

received the Presidential assent and became the Constitution

(101st Amendment) Act 2016.

6. Article 246-A was inserted, providing the establishment

of the Goods and Services Tax Council, which came into force on

12.09.2016 to provide a constitutional mandate for legislation of

the GST Act. The remaining Sections of the Constitution (101 st

Amendment) Act 2016 came into force with effect from

16.09.2016.

7. The President of India Constituted the Goods and

Services Tax Council (GST Council) on 15.09.2016. The GST

Council was to make recommendations to the Union and the

States inter-alia on model Goods and Services Tax Laws, principles

of levy, apportionment of Goods and Services Tax levied on

supplies in the course of inter-state trade and commerce and

principles that govern the place of supply. The GST Council

prepared the model GST law, model IGST law, and GST

compensation law. With some modifications, those model GST laws

prepared by the GST Council became the draft for the Central

Goods and Services Tax Bill, the Integrated Goods and Services
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15

Tax Bill, the Union Territory Goods and Services Tax Bill, the

Goods and Services Tax (Compensation to States) Bill and State

Goods and Services Tax Bill. These Bills were debated and passed

by the Lok Sabha, and thus, the Central Goods and Services Tax

Act, the Integrated Goods and Services Tax Act, the Union

Territory Goods and Services Tax Act and the Goods and Services

Tax (Compensation to States) Act came into life.

8. The GST laws have been enacted to overcome the

difficulties of the multiple tax regimes and to get away from the

tariff and non-tariff barriers such as entry tax, check post, etc.,

which would hinder the free flow of trade throughout the Country.

The earlier tax regimes of the States would divide the country into

separate economic spheres, and a larger number of taxes would

create high compliance costs for the taxpayers besides cascading

effects on the value of goods to the consumers. Under the new tax

regime, all earlier taxes, such as sales tax and other taxes, would

get subsumed in a single tax called the Goods and Services Tax,

which would be levied on the supply of the goods or services or

both at each stage of supply starting from manufacture or import

until the last retail level. The GST Act confers the power upon the

Central Government to levy goods and services tax on the supply

of goods, services or both which take place within a State. In the

Statement of Objects and Reasons of Bill, it has been said that the
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GST regime would reduce the cost of production and inflation in

the economy, thereby making the Indian trade industry more

competitive, domestically as well as internationally. Seamless

transfer of input tax credit from one station to another in the chain

of value addition would incentivise tax combines by taxpayers.

GST would broaden the tax base, resulting in better tax combined

with the help of Robots Information Technology Infrastructure. In

essence of GST has been contemplated as tax on value addition.

Cascading tax effects are sought to be avoided by a continuous

chain of set-offs from original suppliers to retailers.

9. ‘One India, One market and One tax’ is the mantra of

the GST regime. The structure of GST is of a destination-based

consumption tax with input tax credit of the tax paid on goods or

services at each stage available in the next stage of value addition

for avoiding cascading effects irrespective of the destination, be it

an inter-state supply or intra-state supply.

10. The flow of ITC along with the supply chain of

registered persons by removing the cascading effect on one hand

and the tax collection by the self-assessment method in every tax

period, on the other hand, is to happen simultaneously in every

financial year. Section 12 provides the taxing event. Section 12(1)

specifies that the liability to pay tax on goods shall arise at the

time of supply either be the date of issue of invoice by the supplier

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or the last date, which is required under Section 31 to issue the

invoice with respect to the supply on the date on which the

supplier receives the payment with respect to the supply. Section

13 provides that the liability to pay tax on services shall arise at

the time of supply which may be the date of issue of invoice by the

supplier or, if the invoice is issued within the period prescribed

under Section 31 or the date of receipt of payment whichever is

earlier, or the date of provision of service if the invoice is not

issued within the time period prescribed under Section 31 or the

date of receipt of payment or the date on which the recipient

shows the receipt of services in his books of account. Section 15

provides that the value of the supply of goods or services or both

shall be the transaction value, which is the price actually paid or

payable for the said supply of goods or services or both, provided

the recipients and the supplier are not related, and the price is the

sole consideration for the supply.

Statutory Prescription:

11. As is evident from the Statement of Objects and

Reasons of the GST Bill, pre-GST tax regimes on the supply chain

of goods and services had the biggest drawback of the cascading

effect of taxes as the right to set-off was not available under pre-

GST tax regimes prevailing in the Central and the States. Input
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Tax Credit appears to be an essential part of the GST regime. The

GST Act provides for Input Tax Credit in four stages.

1) Entitlement to input tax credit under Section 16

of the Act subject to the conditions/restrictions
prescribed.

2) Claiming input tax credit and provisional credit

in the electronic credit ledger under Sections 41(1),
43A and 49(2).

3) Utilisation and making payment of the input tax

credit under Section 41(2) and Section 49(4).

4) Refund of the balance if any under Section 54.

Section 16 which provides for eligibility and conditions for

taking input tax credit reads as under-:

Section 16. Eligibility and conditions for taking input tax credit.-

(1) Every registered person shall, subject to such

conditions and restrictions as may be prescribed and in the
manner specified in section 49, be entitled to take credit of
input tax charged on any supply of goods or services or
both to him which are used or intended to be used in the
course or furtherance of his business and the said amount
shall be credited to the electronic credit ledger of such
person.

(2)Notwithstanding anything contained in this section, no

registered person shall be entitled to the credit of any
input tax in respect of any supply of goods or services or
both to him unless,-

(a) he is in possession of a tax invoice or debit note issued

by a supplier registered under this Act, or such other tax
paying documents as may be prescribed
1[(aa) the details of the invoice or debit note referred to in
clause (a) has been furnished by the supplier in the
statement of outward supplies and such details have been
communicated to the recipient of such invoice or debit
note in the manner specified under section 37;]
(b) he has received the goods or services or both.

2[Explanation.- For the purposes of this clause, it shall be

deemed that the registered person has received the goods
or, as the case may be, services-
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(i) where the goods are delivered by the supplier to a

recipient or any other person on the direction of such
registered person, whether acting as an agent or
otherwise, before or during movement of goods, either by
way of transfer of documents of title to goods or otherwise;

(ii) where the services are provided by the supplier to any

person on the direction of and on account of such
registered person;]

3[(ba) the details of input tax credit in respect of the said

supply communicated to such registered person under
section 38 has not been restricted;]

(c) subject to the provisions of 4[ section 415[***]], the tax

charged in respect of such supply has been actually paid to
the Government, either in cash or through utilisation of
input tax credit admissible in respect of the said supply;
and

(d) he has furnished the return under section 39:

Provided that where the goods against an invoice are
received in lots or instalments, the registered person shall
be entitled to take credit upon receipt of the last lot or
instalment:

Provided further that where a recipient fails to pay to the

supplier of goods or services or both, other than the
supplies on which tax is payable on reverse charge basis,
the amount towards the value of supply along with tax
payable thereon within a period of one hundred and eighty
days from the date of issue of invoice by the supplier, an
amount equal to the input tax credit availed by the
recipient shall be[paid by him along with interest payable
under section 50], in such manner as may be prescribed:
Providedalso that the recipient shall be entitled to avail of
the credit of input tax on payment made by him 10[to the
supplier] of the amount towards the value of supply of
goods or services or both along with tax payable thereon.

(3) Where the registered person has claimed depreciation

on the tax component of the cost of capital goods and plant
and machinery under the provisions of the Income tax Act,
1961 (43 of 1961), the input tax credit on the said tax
component shall not be allowed.

(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 the6[thirtieth day of
November] following the end of financial year to which
such invoice or7[****] debit note pertains or furnishing of
the relevant annual return, whichever is earlier.

8[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
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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 till the due date
for furnishing the details under sub-section (1) of said
section for the month of March 2019.]”

12. Each registered person is allotted three ledgers: (1) an

electronic cash ledger, (2) an electronic credit ledger, and (3) an

electronic liability ledger. The electronic cash ledger shows the

cash available for settling the tax and related liabilities; the

electronic credit ledger shows the input tax credit available to the

registered person, and the electronic liability ledger shows the

registered person’s tax and any other liability. Admissible input

tax is credited to the taxable person’s electronic credit ledger. This

amount represents the actual tax paid by the taxable person to his

supplier, which in turn is paid to the Government, and subsection 4

of Section 49 enables the taxable person to pay his output tax

utilising the balance available in the electronic cash ledger. In

effect the tax already paid by the taxable person is allowed to be

set off against the output tax liability.

13. The input tax credit is not an absolute right but is an

entitlement subject to conditions and restrictions under the

provisions of the Act and is to be availed in a specified manner.

14. Section 16(2) prescribes four conditions to avail the

input tax credit

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a) Possession of tax invoice, debit note or other

prescribed tax payment document.

b) Receipt of goods or services or both

c) Actual payment of taxes for supply

d) Furnishing of the return

These four conditions are cumulative and not alternative.

Clause (b) of Sub-section 2 mandates the receipt of goods or

services for claiming the input tax credit. Clause (c) of Section 2

mandates the payment of tax to the Government by cash or by

utilizing the input tax credit. The input tax so utilized must be

admissible in respect of the supply. The utilization of input tax

credit is under Section 41 or Section 43A as may be applicable.

15. Filing of returns is prescribed under Chapter IX of the

CGST Act. Section 37 of the CGST Act provides for filing of the

return in the prescribed form by the seller effecting outward

supply. Section 37(1) of the CGST Act mandates furnishing

electronically the details of outward supplies of goods or services

or both effected during the tax period on or before the 10 th day of

the month succeeding the said tax period. Such details are to be

communicated to the recipient of the said supplies within such

time and in such manner as may be prescribed. Rule 59 of the

GST prescribes FORM GSTR-1. The details of the inward supplies

are to be furnished by the recipient of the supply in FORM GSTR-

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2. On the basis of the details already furnished, a dealer is

required to furnish monthly returns in FORM GSTR-3 and GSTR-

3B. A dealer is eligible for the input tax credit under Section 16 of

the Act in respect of purchases effected from registered dealers,

who have already collected tax from the seller dealer. The details

of such inward supplies are to be uploaded by the dealer in FORM

GSTR-2. The supplier is bound to upload the details of sales

effected by him to the purchaser dealer in FORM GSTR-1. The

purchaser dealer would file the monthly returns in FORM GSTR-3

by taking credit of the input tax credit available pursuant to FORM

GSTR-2 filed by him. Only the net liability after deducting the

input tax credit is required to be satisfied by the purchaser.

Section 16(2)(c) restricts the claim of input tax by a purchasing

dealer to the extent of the tax charge against the supply of goods

has been paid to the Government by the supplier of goods. If the

supplier dealer does not remit the tax collected from the

purchasing dealer, the latter is denied the benefit of the input tax

credit.

16. Rule 36 of the GST prescribes the documentary

requirements and conditions for claiming the input tax credit. Rule

36 of the GST Act reads as under:

“(1) The input tax credit shall be availed by a registered

person, including the Input Service Distributor, on the basis of
any of the following documents, namely,-
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(a) an invoice issued by the supplier of goods or services or

both in accordance with the provisions of section 31;
(b) an invoice issued in accordance with the provisions of
clause (f) of sub-section (3) of section 31, subject to the payment
of tax;
(c) a debit note issued by a supplier in accordance with the
provisions of section 34;
(d) a bill of entry or any similar document prescribed under the
Customs Act, 1962 or rules made thereunder for the
assessment of integrated tax on imports;
(e) an Input Service Distributor invoice or Input Service
Distributor credit note or any document issued by an Input
Service Distributor in accordance with the provisions of sub-
rule (1)of rule 54.
(2) Input tax credit shall be availed by a registered person only
if all the applicable particulars as specified in the provisions of
Chapter VI are contained in the said document,
2[Provided that if the said document does not contain all the
specified particulars but contains the details of the amount of
tax charged, description of goods or services, total value of
supply of goods or services or both, GSTIN of the supplier and
recipient and place of supply in case of inter-State supply,
input tax credit may be availed by such registered person.]
(3) No input tax credit shall be availed by a registered person
in respect of any tax that has been paid in pursuance of any
order where any demand has been confirmed on account of
any fraud, willful misstatement or suppression of facts.
3[(4)No input tax credit shall be availed by a registered person
in respect of invoices or debit notes the details of which are
required to be furnished under sub- section (1) of section 37
unless,-
*the details of such invoices or debit notes have been furnished
by the supplier in the statement of outward supplies in FORM
GSTR-1or using the invoice furnishing facility; and
*the details of 4[input tax credit in respect of] such invoices or
debit notes have been communicated to the registered person
in FORM GSTR-2B under sub-rule (7) of rule 60.”

17. Thus, if a purchasing dealer has documents in its

possession as mentioned in Rule 36, he may avail the input tax

credit in respect of invoices/debit notes, the details of which are to

be furnished under Section 37(1) provided that the tax of such

invoices and debit notes has been furnished by the supplier in the

statement of output supplies in FORM GSTR-1 or using revise

furnishing facility; and the details of input tax credit in respect of

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such invoices and debit notes has been communicated to the

registered persons in FORM GSTR -2B.

Submissions on behalf of the petitioners:

18. The petitioners have submitted that the petitioners who

were registered dealers under the provisions of the CGST Act and

KSGST Act, 2017 are being denied the claim of input tax credit

despite they are in possession of valid tax invoice, proof of

payment of value of goods along with GST components to the

respective suppliers and receipt of the goods. It is submitted that

in some cases respective supplier had remitted the tax (GST) but

not reflected in their return GSTR due to some technical reasons.

Another category of petitioners is those who have received the

goods or services and have valid tax invoices, proof of payment of

the value of goods along with the GST component to the respective

suppliers, but the respective suppliers had not remitted the GST

on the supply made by them to the petitioners. The third category

of petitioners are those who are in possession of an invoice but

have no clear proof of payment of consideration or tax towards the

inward supply and might not have received goods in their

possession. The first out of the three categories of the petitioners,

who are recipients of the goods supplied to them by the supplier

dealers, their case is covered in Circular No.183/15/2022-GST

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dated 27.12.2022 issued by the Central Board of Indirect Taxes

and Customs.

19. It is submitted on behalf of the petitioners that the

GSTR-2A is an auto-populated, dynamic, read-only document

containing details of inward supplies based on details of outward

supplies filed by the purchasing dealer. FORM GSTR-2A is only a

facilitator for making a confirmed decision while doing self-

assessment. Non-performance or non-operability of FORM GSTR-

2A or, for that matter, the other forms should be of no avail

because a registered person is obliged to submit a return on the

basis of such self-assessment in the Form prescribed manually on

an electronic platform. Non-availability of the payment of tax in

GSTR-2A cannot impact the entitlement of the taxpayers to avail

the input tax credit on the self-assessment basis in consonance

with the provisions of Section 16 of the GST Act. It is further

submitted that the CBIC in its press release dated 18.10.2018, has

clarified that furnishing of output details in FORM GSTR-1 by the

corresponding supplier(s) and the facility to view the same in

FORM GSTR-2A by the recipients is in the nature of taxpayer

facilitation and does not impact the entitlement of taxpayer to

avail ITC on self-assessment basis in consonance with the

provisions of Section 16 of the Act. It is therefore, submitted that

the claim for input tax credit, for which the recipient is otherwise
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eligible, should not be denied merely on the difference between

GSTR-2A and GSTR-3B.

20. It is also submitted that Section 155 of the GST Act

causes a burden upon the recipient of goods or services to prove

the genuineness of the ITC claimed by him. Section 155 of the GST

Act prescribes that “Where any person claims that he is eligible

for an input tax credit under this Act, the burden of proving such

claim shall lie on such person.”

21. The submission is that if the recipient dealer has in his

possession, documents as mentioned in Rule 36 i.e., valid tax

invoice, proof of payment of value of goods along with GST

component to the respective supplier and the actual receipt of

goods, it should be considered that he has discharged the burden

under Section 155 regarding the genuineness of the ITC claim by

him. The recipient dealer cannot be burdened to ensure that the

supplier of goods and services has paid the tax and such a

condition would be absolutely impossible for the recipient dealer

to comply with.

22. The maxim lex non cogit ad impossibilia means that law

does not compel a man to do anything in vain or impossible or do

something which he cannot possibly perform. It is within the

power of the State to collect and recover taxes, and this duty
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cannot be passed on to the recipient dealer, if the supplier dealer

does not pay the tax though collected from the recipient dealer.

23. It is further submitted that there could be two possible

situations which may arise in the case of claim of ITC by the

purchaser dealer:

(i) Though the recipient dealer has in his possession all the

documentary evidence as provided under Rule 36 to prove the

eligibility of the claim of ITC, but supplier dealer has omitted to

pay the output tax, and the Government fails to recover the tax

from the supplier dealer, in such a situation, though the recipient

dealer has paid the tax on inward supplies received from the

supplier dealer but the recipient dealer would not be entitled to

claim the input tax credit. The recipient dealer has no means to

force the supplier to make the payment and therefore, the doctrine

of impossibility would be applicable in such a situation; and (ii)

where the revenue is able to recover the tax from the supplier

dealer along with the interest applicable and penalty under

Sections 73 or 74 of the GST Act, however, the recipient dealer

would be denied the claim of input tax credit as the said tax would

not get reflected in GSTR-2A. This situation would lead to unjust

enrichment of the Government as on the same taxable transaction,

the Government would collect tax from the recipient dealer and

also from the supplier along with interest and penalty, as there is
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no provision for refunding the amount collected from the recipient

in cases where the department successfully recovers the unpaid

tax from the supplier who had defaulted. It is therefore, submitted

that Section 16(2)(c) is in violation of Article 19(1)(g) of the

Constitution of India. It is further submitted that this provision

either be declared unconstitutional or read down and should be

held that GSTR 2A is an auto-populated dynamic document based

on GSTR 1 filed by the supplier dealer. GSTR-2A is a read-only

document and the recipient dealer does not have any means to

edit or modify the data in it, therefore, any missing invoice details

in GSTR-2A due to the supplier dealer failing to furnish the correct

details or otherwise should not be a basis for denying the input tax

credit to a recipient dealer if his claim is genuine and bona fide

and he has relevant documents in his possession to prove his claim

as the recipient dealer has no means to compel the suppliers to file

their returns on the statutory form.

24. It is submitted on behalf of the petitioners that by

invoking the provisions of Section 16(2)(c) of the GST Act, to deny

input tax credit to the bona fide purchaser dealers, the

respondents would be treating both the purchaser dealers who

collude with the supplier dealers to claim false credit of ITC and

innocent and bona fide purchaser dealers who have paid the tax to

the supplier dealers equally. Section 16(2)(c) confers unchecked

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powers on the respondent authorities to treat bona fide and

genuine purchaser dealers and guilty purchasers alike. This equal

treatment of bona fide or innocent purchasers and guilty

purchasers is violative of Article 14 of the Constitution of India. It

is further submitted that denial of ITC to a bona fide purchaser

dealer who is the recipient of the goods because of the default of

the supplier dealer in not making the payment of GST, though the

supplier dealer has collected it from the recipient of the goods

would tantamount shifting the incidence of tax from supplier to the

recipient. Denying of ITC to the bona fide purchaser dealer for

default of supplier dealer over whom the purchaser dealer has no

control, is an arbitrary and irrational exercise of powers, and such

a provision is an infarction of the equality clause enshrined under

Article 14 of the Constitution of India.

25. It is further submitted that the claim of ITC is a right of

the recipient dealer and not a concession given by the taxing

authorities under the statute. The input tax credit under the GST

Act is the property of the recipient dealer, and denying the credit

for default of the supplier dealer would be violative of Article 300

A of the Constitution of India, which provides that no person shall

be deprived of his property, save by the authority of law.

26. The GST regime has been brought in to provide a

uniform tax on the supply of goods and services across the country
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and to avoid cascading effects on such supply. The ITC is the very

basis of the GST regime. The tax structure under the GST is

heavily dependent on ITC being available to the recipient dealer.

The recipient dealer would depend heavily on the credit available

to him under the Act for discharging his outward tax liability. If the

eligible tax credit is blocked or denied or it is made to reverse

credit already taken, it affects the business operation of the

recipient dealer. It is the submission of the Counsel for the

petitioners that Section 16(2)(c) is a violation of Article 19(1)(g) of

the Constitution of India, inasmuch as the denial of eligible input

tax credit affects the business operation of the recipient dealer. It

is submitted that Section 16(2) (c) of the GST imposes an

unreasonable and onerous condition and gives unequal treatment

to the bona fide recipient of the goods and services. The section

does not provide any measure for compliance by the supplier

dealer for making payment collected from the recipient dealer, and

therefore, the said provision falls foul of Articles 14 and 19 of the

Constitution of India.

27. It has also been submitted on behalf of the petitioners

that furnishing of outward details in GSTR-1 by the corresponding

supplier dealers and the facility to view the same in GSTR-2A by

the recipient dealer are in the nature of facilitation and should not

have an impact upon the ability of the recipient dealer to avail ITC
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on self-assessment basis as is the general mandate of Section 16 of

the Act. In the alternative, it is submitted that the provision of

Section 16(2)(c) may be read down and if the recipient dealer

sufficiently establishes that he has paid the tax to the supplier and

the default is on the part of the supplier dealer, the ITC should not

be denied to the recipient dealer and the action should be taken

against the supplier dealer who has defaulted in posting the tax

collected from the recipient dealer. In the absence of any finding

about the recipient dealer's mala fide intention, connivance or

wrongful association with the supplier, the eligible ITC should not

be denied to the recipient dealer on account of the fraudulent

conduct of the supplier dealer. If the recipient dealer is in

possession of the requisite documents to substantiate the claim of

eligibility for ITC, it should be considered that the recipient dealer

has discharged the burden of proof under Section 155 of the GST

Act.

28. Section 16(2)(c) requires the payment of taxes to the

Government to be eligible for availing the credit of input tax,

subject to the provisions under Section 41. Section 41(1) provides

that every registered person shall be entitled to avail the credit of

eligible input tax, ‘as self-assessed’, in his return. Section 41(2)

provides that when the supplier fails to pay the tax payable, the

input tax availed by the registered persons shall be reversed along

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with interest. Proviso to Section 41 provides that once the supplier

makes the payment of tax, payable to the Government, the

registered person can re-avail the same.

29. The only requirement to avail ITC is the payment of tax

by the supplier. The language used by the legislation if closely

examined, the underlying intention of the legislature is that the

ITC under the GST Act is in the nature of right, inasmuch as

Section 16(1) which is the enabling provision guarantees the

registered persons to take credit for input tax paid by him on the

supply of goods or services or both received by him. The language

of Section 16(1) makes it clear that the input tax credit is a matter

of right. This entitlement to ITC follows from complying with the

conditions and is subject to the restrictions contained in Section

49 of the Act. Section 49 makes it clear that the ITC, ‘as self-

assessed in the return,’ shall be credited to the electronic credit

ledger of the registered person in accordance with Section 41.

From reading the provisions of Sections 16(1), 41 and 49, it would

be clear that the ITC is nothing but the right of the recipient

dealer. Under Section 16(1) registered person ‘shall be entitled’ to

take credit of ITC. This phrase would show the mandatory effect of

the provision. Entitlement means rights of certain benefits and

privileges. The submission is that the ITC is a matter of right and

not a concession. Denial of ITC on a mismatch with the figure

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mentioned in the auto-populated documents in FORM GSTR-2A is

unjustified. Authorities must conduct an enquiry and should verify

the documents in possession of the purchaser or the recipient

dealer to ascertain the bona fide of such a dealer in claiming the

ITC on supplies received from the supplier dealer. Section 16(2)

begins with a non-obstinate clause and prescribes certain

restrictions and conditions for availing ITC by the recipient dealer.

If the supplier dealer after collecting the tax from the recipient

dealer has not paid the same to the Government, the recipient

dealer cannot be held liable for such conduct of this supplier

dealer, and if the recipient dealer in his self-assessed returns has

claimed the ITC for which such dealer has documentary evidence

to support the same, denial of the rightful claim of ITC would run

against the very scheme of the GST regime as provided under the

GST Act. It is further submitted that the Central Board of Indirect

Tax and Customs realised this difficulty and issued Circular No.

F&C 49/21/2016-GST and Circular No.59/33/2018-GST dated

04.09.2018 giving clarification to refund related issues. The

circular states that the refund claim shall be accompanied by a

printout of FORM GSTR-2A of the claimant for the relevant period

for which the refund is claimed. It is further stated that the proper

officer shall treat FORM GSTR-2A as evidence itself. However,

while FORM GSTR-2A does not contain the details of all invoices
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related to the ITC availed, the proper officer should call for such

invoices if he deems it necessary for the examination of the claim

for refund; the same is the case where the ITC is sought to be set

off against the other levies.

30. On behalf of the petitioners, it is submitted that Section

16(4) is a procedural provision, and by recourse to the procedural

provision, the substantive right of the taxpayer, i.e., the claim of

ITC on the inward supply, cannot be defeated. Input Tax Credit is

the core concept of the GST regime as it avoids the cascading

effect of taxes and ensures that tax is collected in the State where

goods, services, or both are consumed.

31. Filing of returns with late fees and interest cures the

defect of late filing. Once a return has been filed with a late fee, by

applying the provisions of Section 16(4) of limitation, the

substantial claim of the dealer should not be defeated regarding

ITC, which is otherwise admissible to him under the provisions of

the Act. Once the returns are accepted with the late fee, the dealer

should be eligible for the ITC. Once the delay is regularised, such

returns are to be construed to be filed within the due date. Section

47 of the Act provides for the filing of returns with late fees, and if

a dealer files the return beyond the due date with late fees, such

returns should be accepted without applying the rigour of

limitation prescribed under Section 16(4) of the Act.

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32. It is submitted that the provisions of Section 16(4) of

the Act are arbitrary in nature and hence violative of Articles 14

and 19(1)(g) of the Constitution of India. The assessee cannot be

made to suffer by disallowing ITC on account of the failure on the

part of the Department to notify the FORM GSTR-2 and GSTR-3

respectively. It is also submitted that the retrospective amendment

to Rule 61 of the CGST Rules, 2017 is also unconstitutional, being

violative of Article 14 of the Constitution. Similarly, retrospective

amendment to Rule 61(5) of the Rules is also unconstitutional,

being violative of Article 279A of the Constitution of India.

33. Delay in making the entries within the time fixed should

not be the basis for denying the benefits of ITC. It is further

submitted that ITC is a facility of credit, and it is in the nature of

vested rights. The credit earned under the GST Act is the property

of the taxable person, and therefore, the denial of ITC would be in

violation of Article 300A of the Constitution of India. This

substantial benefit cannot be denied due to the procedural lapse of

mere non-disclosure in GSTR-3B within the due date. Since, the

details of ITC are already available in GSTR-2A, which is available

with the Department prior to the due date prescribed under

Section 16(4), and the availment of ITC would be a mere

disclosure in GSTR-3B, therefore, the substantial benefit cannot be

denied due to procedural lapse of mere non-disclosure in GSTR-3B

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within the due date. Denying of ITC to a dealer and levying tax,

interest and penalty for not filing the return within the stipulated

time under Section 16(4) of the Act would lead to significant

financial setbacks for the registered suppliers/recipients of goods

and services. This also results in double taxation in the form of

collecting tax from the purchaser and supplier on the same goods

or services due to procedural error. The legislative intent behind

inserting Section 16(4) can never be to take away the ITC which is

made eligible by following the broad scheme of the law. It will

never be the intent of the legislature to take away the claim or the

benefit from one hand and give it to another. The purpose of

Section 16(4) is to ensure that the ITC should be taken in a timely

manner within the specified time limit in the Books of Accounts of

the registered tax person. Section 16(4) of the Act does not permit

to avail ITC relating to the preceding financial year in case of

delayed filing of the subsequent year’s September month GSTR-

3B. Considering the intricacies, and complexity associated with

return filing during the initial years of GST, Technical glitches,

frequent amendments, the careful process followed in ascertaining

eligible ITC, knowledge level of the taxpayer in understanding the

flow of credit through a dynamic return GSTR 2A and other

related factors should be considered, and therefore, if the returns

have been filed beyond the time prescribed with late fees, the
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dealers should not be denied of his claim for ITC as reflected in

GSTR 2A.

34. Sri. Dr K.P. Pradeep has submitted that Section 16(4)

providing a time limit to claim the ITC by purchasing

dealer/recipient dealer is arbitrary and unreasonable. It is settled

law that even the provision of a taxing statute or even the taxing

statute in its entirety can be tested for its constitutionality in the

exercise of the power of judicial review by a Constitutional court.

If there is a manifest arbitrariness in the provision itself or the

provision is unjust or discriminatory in nature, the said provision

can be struck down as being violative of the Constitution. If a

taxing statute violates the principle of equality or is discriminately

unreasonable and arbitrary, it would be violative of Articles 14 and

19(1)(g) of the Constitution of India. The condition that unless the

return in Form 3B is filed within the stipulated time, the recipient

dealer would not be entitled to ITC is arbitrary, unjust, and liable

to be struck down.

35. It is also submitted that the supplier dealer acts as an

agent of the Government to collect tax from the recipient dealer.

The recipient dealer would pay the tax to the supplier dealer while

receiving the supply of goods or services from him, and the

supplier dealer collects tax on behalf of the Government to be

deposited by him with the Government. It is submitted that though

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the tax has been collected by the Government through the supplier

dealer, the ITC would be disallowed to the recipient dealer on the

ground that he could not file the return in GSTR-3B on time and

did not claim the ITC within the time specified under Section

16(4). It is also submitted that it amounts to double taxation; the

recipient dealer would have already paid the tax on the supply

received to the Government through the supplier dealer, but if he,

for any reason, has not filed the return on GSTR-3B claiming ITC

on time, he would have to pay entire tax with interest and penalty.

It is, therefore, submitted that such a condition of claiming ITC by

filing GSTR-3B on time is unreasonable and arbitrary against the

spirit of the GST regime.

36. It is further submitted that the objective of

implementation of the GST regime by introducing Article 246A and

enacting the GST Acts is not simply to generate revenue and

collect tax by providing modes of levy and collection. The main

objective is to avoid cascading effects on the supply chain of goods

and services and ease the taxing administration. The provision of

Section 16(4) runs contrary to the said objective of the legislation

and, in effect, is punitive. Section 16(4) is in contradiction with the

policy framework under the Constitution, particularly Articles

246A, 286, 366(12A) and (26A).

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37. Dr. Pradeep Kumar, learned counsel for the petitioner,

also submits that Section 39 provides for the furnishing of returns

within the prescribed time. However, under Section 39(6), the

Commissioner may, by notification, extend the time limit for

furnishing the returns for a particular class of registered persons

as may be specified, for reasons to be recorded in writing.

38. Section 16(4), however, provides for a statutory

stipulation of a time limit for filing the return in GSTR -3B in

claiming the ITC. Section 44 of the Act provides for filing the

annual return for every financial year on or before the 31 st day of

December following the end of such financial year. However, the

time limit prescribed under Section 16(4) is 30 th November, and it

is not subject to any change. It also provides a rider that the claim

should be made before 30th November or before the date of

furnishing the relevant annual return, whichever is earlier. By

reading the provision of Sections 39,41,44 and 50, which permit

relaxation in furnishing returns, permits filing returns with late

fees and payment of tax with interest on the late period. The

provision under Section 16(4) mandating submission of a claim for

ITC within a particular time should be read as a directory and not

mandatory.

39. In the alternative, Dr Pradeep Kumar submits that by

Sections 100 of the Finance Act, 2022, Act 6 of 2022, the due date
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for furnishing of return under Section 39 in the month of

September has been substituted with 30 th day of November in

Section 16(4). It is submitted that the said substitution should

apply retrospectively from 01.07.2017 to 30.11.2022, as it is only a

procedural aspect. The amendment has been introduced to ease

the difficulties pointed out. In several cases which are pending

before the Court, the claim was made before 30 th November, but in

the relevant period, it was 20 th October, which was the due date

for furnishing the return under Section 39 for the month of

September. It is submitted that if the retroactivity is given to the

amended provision, the registered person can overcome the

present difficulties. Learned counsel for the petitioners also

submitted that this court may read down Section 16(4) to give

effect to the amended provision of providing the 30 th day of

November for the due date for furnishing the return under Section

39 for the month of September with effect from 01.07.2017,

considering the peculiar nature of difficulties in initial period of

implementation of the GST regime.

40. The liability to tax arises at the time of supply.

Although, the due date for filing the return can vary according to

the notified dates. Return means to disclose the liability as per the

books of account. The actual availment of credit happens in the

books of account, and it is merely disclosed through return. It is,

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therefore, submitted that the availment of ITC is not dependent on

the filing of GSTR-3B. If an assessee can prove with evidence that

the credit was availed in the books of account within the time limit

prescribed in Section 16(4), claim the ITC would be in compliance

with Section 16(4). The filing of return in GSTR-3B is, therefore,

only a condition precedent for allowing the claim of ITC, which has

been claimed in the books of account.

Submissions of the Respondents: -

41. On behalf of the respondents, it is submitted that under

the GST laws, the tax collected has to be assigned to the

jurisdiction where consumption takes place. The ITC, therefore,

crosses a State during inter-state supplies. The GST Act prescribes

the conditions, restrictions, time limit and the manner for availing

ITC. These conditions, restrictions etc along with other provisions

form the legal fulcrum that balances three requirements:

a) granting of ITC for removing cascading effect.

b) Achieving collection of Tax by self-assessment method for

each financial year; and

c) ITC transfer compliance to the destination state on inter-

state- supplies- (through the IGST mechanism where the

Centre collects tax equivalent to (CGST and SGST).

42. An inter-state supplier in the originating / exporting

State uses his CGST / SGST credits for payment of IGST collected
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from the recipient. The recipient based in the destination State

will discharge his output tax liability (CGST+SGST) by claiming

credit for the IGST he paid to the inter-state supplier in the

originating State. The Centre and originating State have an

obligation to transfer the CGST and SGST component utilized by

the inter-state supplier to the IGST Account to make it available

for the destination State. This obligation of the Central and State

Governments is prescribed under Section 53 of the CGST Act

which would read as under:

“Transfer of Input Tax Credit:-On utilisation of

input tax credit availed under this Act for
payment of tax dues under the Integrated Goods
and Services Tax Act in accordance with the
provisions of sub-section (5) of section 49, as
reflected in the valid return furnished under
sub-section (1) of section 39, the amount
collected as central tax shall stand reduced by
an amount equal to such credit so utilised and
the Central Government shall transfer an
amount equal to the amount so reduced from
the central tax account to the integrated tax
account in such manner and within such time as
may be prescribed.”

43. In the absence of Section 16(2)(c) in a case where the

inter-state supplier defaults in making payment of tax

(SGST+CGST collected) and the interstate supplier is allowed to

take credit based on his invoice, the originating State Government

will have to transfer amounts it never received in the tax periods

in a financial year to the destination States. This would cause loss

to the State inasmuch as the originating State would be required

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to transfer the amount without having received it, and this

scenario, in the absence of Section 16(2)(c), would completely

upset the entire tax scheme under the GST laws.

44. It is further submitted that granting tax credit is an

integral part of the computation and collection of tax. Tax

collection is an important element of budget allocation and

estimation of the Union and State Governments. Section 16 of the

Act and Rules made thereunder provide conditions, restrictions,

time-limit and manner for availing ITC, which is a self-monitoring

and self-policing provision. This is for the registered person to

request the supplier dealer for documentation and tax payment

compliance in order to claim ITC. If the supplier dealer fails to

deposit the tax collected from the recipient dealer, it would break

the tax chain and the ITC in such a situation cannot be allowed as

the State could not have received the tax, and therefore, there

would be no question of making payment of the tax where the

State has not received the tax.

45. Learned counsel appearing for the CBIC has submitted

that a new provision of Section 16(2) (aa) has been introduced

with effect from 01.01.2022 providing for communication for

matching of recipient’s invoice with the supplier’s and outward

supply via GSTR 2A/2B. Section 38 stands substituted with effect

from 01.10.2022 with provision for auto-generated statement

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GSTR-2B, indicating the eligible and ineligible credit in respect of

inward supply. Section 41 is also substituted providing for reversal

and re-availing of credit. Prior to these amendments, Section 41

provided that the supplier could take only eligible ITC as self-

assessed credit in his return, and that amount would be credited

on a provisional basis to the electronic credit ledger, which can be

utilized for payment of self-assessed output tax. The manner of

crediting is provided under Section 49(2) of the Act.

46. Prior to the 01.01.2022 amendment, the eligible credit

had to be determined by the taxpayer based on the supplier’s

GSTR 1 reflected in GSTR-2A and by verifying his books of account

and the supplier’s GSTR-3B return filed online. To complete this

process and avail credit in respect of inward supplies for a

financial year, a recipient had a maximum of 18 months to a

minimum of 6 months’ time under Section 16(4) of the Act as it

stood prior to 01.01.2022. For getting the invoice/debit note

uploaded by the supplier and tax paid, a maximum of 20 months to

a minimum of 8 months after that is available with effect from

01.01.2022. The time limit for availing ITC in GST laws cannot be

said to be a restriction. The estimation of budgetary allocation has

to be taken by the Central and State Governments every year, and

they are required to pass a budget. There cannot be any

uncertainty regarding tax collection, budgetary allocation and

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estimation of the Central and State Governments. Therefore, the

time frame makes it a reasonable mechanism and cannot be said

to be in violation of any of the rights of the petitioner as submitted

by them. It is further submitted that the time limit for availing the

ITC in the GST laws is not a new provision. Different VAT

legislations and CENVAT Credit Rules provided time limits to claim

eligible ITC.

47. To overcome the initial difficulties at the initial stage of

implementation of the GST regime and the large-scale mismatch of

outward supply reflected in recipients, GSTR-2A with ITC availed

in GSTR-3B returns, the CBIC has issued Circular

Nos.183/15/2022 and 193/05/2023, considering that GSTR 2A was

not available during the inception of GST. The said circulars cover

the period from the inception of the GST regime till the insertion

of Section 16(2)(aa) with effect from 01.01.2022. ITC can be

claimed and availed by the recipient for the bona fide scenarios

listed in those circulars on submitting proof of actual payment to

the Government by his supplier.

48. Section 16(1) of the CGST is the enabling provision. The

said provision is subjected to conditions and restrictions in the

manner provided under Section 49 of the CGST Act. It is further

submitted that the ITC is not a right of a registered dealer, but it is

a concession extended under the statute, which is evident from

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Section 49(2) of the CGST Act. Section 16(2) places restrictions on

eligibility for ITC, whereas Section 16(4) is the restriction on time

for availing ITC. Section 16(2) cannot be read to restrict other

restricting provisions, i.e., Sections 16(3) and 16(4).

49. In view of the aforesaid, it is submitted that neither

Section 16(2)(c) nor Section 16(4) are infarction of Article 14 and

19(1)(g) nor unworkable as contended. It is, therefore, submitted

that the writ petitions are devoid of merit and substance, which

are liable to be dismissed.

50. Mr Mohammed Rafiq, the learned Special Government

Pleader (Taxes), has submitted that the sales tax, though, is an

indirect tax on the consumers, but the incidence of tax is on the

sale of goods, which falls squarely on the dealer. It may not be

necessary for the dealer to have passed the incidence of tax on

sale to the purchaser. Therefore, the contention raised in the writ

petition is that by denying the ITC under the provisions of Section

16(2) (c) and 16(4) of the Act, the levy loses its character as an

indirect tax, has no merit and is to be reflected.

51. It is further submitted that the ITC enables dealers to

set off tax paid on purchase. But this is not a right of the dealer.

This is a concession provided under the provisions of the Act in

order to avoid a cascading effect on the value chain of the goods

and services supplied. It is submitted that it would always be open

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to the rule-making authority to provide for abridgement or

curtailment of a concession. In support of the said submission, the

learned Special Government Pleader has placed reliance on the

judgments in the case of Godrej & Boyce Mfg. Co.(P) Ltd. &

others V. CST & others [(1992) 3 SCC 624] and Division

Bench judgmNent of the Bombay High Court in Mahalaxmi

Cotton Ginning Pressing & Oil Industries v. State of

Maharashtra [2012 SCC OnLine Bom 733] . An entitlement to

set off is the creation of the statute under the terms and conditions

provided by the legislation, which are required to be strictly

observed. A registered person cannot claim an entitlement to set

off as an absolute right. A dealer would not be entitled to claim

set off unless the conditions precedent are met, which are

prescribed in the statute.

52. Exemptions, concessions and exceptions are to be

treated on par and must be strictly construed. ITC is not a matter

of right. To claim the entitlement of ITC, the burden of proof is on

the assessee. The assessee must establish the claim for the

concession or benefit. Entitlement to ITC is neither a fundamental

right nor a Constitutional right. Such entitlement is always subject

to statutory prescription and can be regulated by the statute

providing conditions and limitations. In support of the said

submission, the learned Special Government Pleader has placed

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reliance on the judgment in Union of India & others V. VKC

Footsteps (India) (P) Ltd. [(2022) 2 SCC 603]

53. It is submitted that the heading of Section 16 is the

eligibility and conditions for taking ITC. Section 16(1) provides for

entitlement to take input tax credit. It is couched as a general

provision which entitles a dealer to take ITC, whereas Section

16(2) provides conditions/restrictions for such entitlement.

Subsection (2) is couched with a non-obstante clause, by virtue of

which it overrides anything contained in the said Section. The

statutory prescription is clear and unambiguous from the negative

language employed “Notwithstanding anything contained in the

Section, no registered person shall be entitled to the credit of any

input in respect of any supply of goods or services or both to him

unless,..”

54. Clauses (a) to (d) of subsection (2) of Section 16 are

limitations and restrictions placed for availing the

concession/entitlement of ITC under Section 16(1). Clause (c) to

Subsection (2) of Section 16 is a mandate and emphatic that no

registered person shall be entitled to the credit to the ITC in

respect of any supply of goods or services or both to him unless

the tax charged in respect of such supply has been actually paid to

the Government. Section 155 of the Act casts a burden of proof in

relation to the claim of ITC on the registered person. Learned

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Government Pleader submits that Section 16 is a code by itself

which provides for entitlement as well as conditions/ restrictions

to claim for ITC which are provided under Clauses (a) to (d) of

Section 16(2). The legislative intent is very clear from the phrase

employed in Section 16(2)(c); “actually paid to the Government”

and thus, the claim/entitlement to ITC under Section 16(1) would

be allowable only to the extent of tax, if it has been actually paid

into the treasury in respect of the goods/services supplied to the

dealer.

55. The learned Special Government Pleader has placed

reliance on the judgment in the case of Astha Enterprises v. The

State of Bihar [CWC No. 10395 of 2023] and State of

Karnataka v. Ecom Gill Coffee Trading (P) Ltd. [2023 SCC

OnLine SC 248] to submit that condition for availing ITC has

been specified in Clause (a) to (d) of Section 16(2) are required to

be satisfied together and in isolation for availing the ITC. The

burden is always on the purchaser dealer to prove the claim for

ITC. There should be credit available in the credit ledger of the

purchaser dealer to claim input tax; otherwise, the claim would

get frustrated, and the claim of ITC cannot be sustained when the

supplier dealer has not paid the tax amount to the Government

despite collection from the purchasing dealer.

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56. The learned Government Pleader has submitted that

there is no force in the arguments of the counsels for the

petitioners that Section 16(2)(c) is in violation of the equality

clause as enshrined in Article 14 of the Constitution of India. The

concession bestowed under Section 16(1) is subject to the

conditions/restrictions as provided in the Section. The ITC, being a

concession/entitlement, can always be subjected to limitations and

restrictions as the legislature may think it proper. The restriction

placed under Section 16(2)(c) is to ensure the payment of tax by

the supplier to the Government and restrictions as to the time for

such availment as contemplated under Section 16(4) are

applicable to all dealers, and therefore, there is no substance in

the submissions of the counsel for the petitioners that there is a

violation of Article 14 of the Constitution of India. The

conditions/restrictions for availing the ITC or claiming of

concession to the ITC are applicable to all registered taxpayers to

claim the concession of the ITC, and therefore, it cannot be said

that there is a violation of Article 14 of the Constitution of India.

Learned Government Pleader also places reliance on the judgment

of the Division Bench of this Court in Nahasshukoor v. Assistant

Commissioner [WA. No.1853 of 2023:2023: KER: 69725

decided on 3rd November 2003] and State of Himachal

Pradesh v. Goel Bus Service [ 2023 SCC OnLine SC 46].

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57. A legislation or provision in the statute can be

challenged only on establishing manifest arbitrariness or

unreasonableness besides legislative incompetence and in-

violation of rights guaranteed under Part-III of the Constitution of

India. There is no manifest arbitrariness or unreasonableness in

providing the conditions for availing the concession of ITC by a

registered person on supplies of goods or services or both

received by him from another registered dealer. [Sharaya Bano

& others v. Union of India; (2017) 9 SCC 1]

58. Challenge to the Constitutional validity of Section 16(4)

of the CGST Act, 2017 has been unsuccessful before the Division

Bench decisions of the High Court of Patna and the High Court of

Andhra Pradesh in Gobinda Construction & others v. Union of

India & others [CWC No. 9108 of 2021, decided on 8 th

September 2023] and Thirumalakonda plywoods v. Assistant

Commissioner of State tax [2023 SCC OnLine AP 1476] . It is

therefore submitted that the issue of whether Section 16(4) of the

Act is constitutionally valid or not is no longer res integra. It is

further submitted that the legislative wisdom in prescribing a

cutoff date for filing the return in claiming the ITC cannot be

interfered with inasmuch as the said prescription is neither

capricious nor whimsical. The time limit prescribed in Section

16(4) is applicable universally to all registered persons. The

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contention that by prescribing a cut-off date for availing the

benefit, some of the registered persons may be adversely affected

cannot be a ground to challenge the provision as it cannot be said

that such a prescription is in violation of Article 14 of the

Constitution of India. Discrimination resulting from fortuitous

circumstances arising out of the particular situation in which some

of the taxpayers find themselves is not hit by Article 14, if the

legislation, as such, is of general application and does not single

them out for harsh treatment. Advantages or disadvantages to

individual assessees are incidental and inevitable and are inherent

in every taxing statute. It has to draw a line somewhere and some

cases necessarily fall on the other side of the line. In support of

the said submission, the learned Special Government Pleader has

placed reliance on Khandige Sham Bhat v. AITO [AIR 1963 SC

591] and the State of Bihar and others v. Bihar Pensioners

Samaj [(2006) 5 SCC 65].

59. Heard Ms. Meera V Menon, Dr K P Pradeep, Mr. K P Abdul Azeez,

Mr. Aji V Dev (Sr), Mr. Tomson T Emmanuel, Mr. K S Hariharan Nair, Mr.

P N Damoodaran, Mr. A Krishnan, Mr. K N Sreekumaran, Mr. A Kumar

(Sr) and Ms. G Mini, learned Counsel for the petitioners; Mr.

Mohammed Rafiq learned Special Government Pleader for the State;

and Mr. P R Sreejith, learned Senior Standing Counsel for the CBIC.
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Issues:

60. Having considered the rival submissions of the learned

Counsel representing the petitioners, the Central Government, the State

Government, and the CBIC, the following issues arise for determination

in this batch of writ petitions:

I) What are the grounds on which a taxing Statute can be held to be

unconstitutional?

II) What is the nature of the claim to Input Tax Credit under the

scheme of the GST Act and the Rules made thereunder?

III) Whether Section 16(2)(c) and Section 16(4) of the CGST/SGST Act

infringe the Constitutional provisions and are unsustainable?

Discussion:

Issue No. I: What are the grounds on which a taxing Statute can be held

to be unconstitutional?

61. Firstly, a tax can be valid if it is within the competence of the

legislature imposing it. Secondly, it is for the public purpose; thirdly, it

does not violate fundamental rights. Article 246A has been inserted by

way of the Constitution (One Hundred and First Amendment) Act 2016,

which paved the way for legislation of Central Goods and Services Act

and State Goods and Services Act, which reads as follows:

“246A. Special provision with respect to goods and services

tax.

“(1) Notwithstanding anything contained in articles 246 and

254, Parliament, and, subject to clause (2), the Legislature of
every State, have power to make laws with respect to goods
and services tax imposed by the Union or by such State.
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(2) Parliament has exclusive power to make laws with

respect to goods and services tax where the supply of goods,
or of services, or both takes place in the course of inter-State
trade or commerce. Explanation.—The provisions of this
article, shall, in respect of goods and services tax referred to
in clause (5) of article 279A, take effect from the date
recommended by the Goods and Services Tax Council.”

62. Thus, the Central Legislature and the State Legislature have

been given concurrent power to enact laws to impose a tax on the

supply of goods or services. GST legislation has been enacted under

Article 246A, which empowers the Central and State legislatures to

enact such a law. In view of the said provision, it cannot be said that the

CGST/SGST Act has been enacted by the Legislature with no

competence. It is also not the contention of the petitioners that the tax

on the supply of goods and services is not for public purposes.

63. The taxing statute can be declared unconstitutional if it

infringes the fundamental rights guaranteed under Part III of the

Constitution of India including Article 14. However, in view of the

inherent complexity of fiscal adjustment of diverse elements, a larger

discretion has to be permitted to the Legislature for classification so

long as there is no transgression of the fundamental principles

underlying the doctrine of classification. The Legislature must enjoy a

wide and flexible power to enable the Legislature to adjust its system of

taxation in all proper and reasonable ways. The Legislature has much

wider elbow room in picking and choosing places, objects, persons,

methods and even rates of taxation so long as it is done reasonably. A

taxing statute cannot be said to be invalid on the grounds of

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discrimination merely because other objects could have been taxed but

are not taxed by the legislature. Similarly, the mere fact that the tax is

more on some goods/persons or categories is no grounds to hold the

provisions invalid.

64. A Constitutional Bench of the Supreme Court in Vivian

Joseph Ferreira v. Municipal Corporation of Greater Bombay [AIR

1972 SC 845] has culled down the principles emanating from several

previous decisions to hold a tax to be a valid tax. Paragraphs 14 to 16 of

the said decision, which are relevant, are extracted hereunder:

“14. The question of validity of taxing statutes has arisen

before this Court in a number of cases. The principle emerging
from them is that in order that a tax may be valid, it is firstly
within the competence of the legislature imposing it, secondly
that it is for a public purpose, and thirdly that it does not
violate the fundamental rights guaranteed by Part III of the
Constitution. The taxing statute is as much subject to Art.14 as
any other statute, 1961 (3) SCR 77: (AIR 1961 SC 552), Raja
Jagannath v. U. P. 1963 (1) SCR 220: (AIR 1962 SC 1563) East
India Tobacco Co. v. Andhra Pradesh 1963 (1) SCR 404: (AIR
1962 SC 1733). Khandige Sham Bhatt v. Agricultural Income
Tax Officer, 1963 (3) SCR 809: (AIR 1963 SC 591) and State of
Andhra Pradesh v. Nalla Raja Reddy, 1967 (3) SCR 28: (AIR
1967 SC 1458). But in view of the inherent complexity of fiscal
adjustment of diverse elements a larger discretion has to be
permitted to the Legislature for classification so long as there
is no transgression of the fundamental principles underlying
the doctrine of classification of 1963 (3) SCR 809: (AIR 1963
SC 591). These principles are that the classification must be
based on an intelligible differentia which distinguishes persons
or objects grouped together from others left out of the group,
and that differentia must have a rational nexus with the object
of the statute. So long as these principles are properly followed
in classifying persons or objects for taxation, the power to
classify must be wide and flexible so as to enable the
Legislature to adjust its system of taxation in all proper and
reasonable ways. (see 1963 (3) SCR 809: (AIR 1963 SC 591)).
15. It is well recognised that a Legislature does not have to tax
everything in order to tax something. It can pick and choose
districts, objects, persons, methods and even rates of taxation
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as long as it does so reasonably (Willis Constitution Law of the

United States, 587). A taxing statute is not invalid on the
ground of discrimination merely because other objects could
have been but are not taxed by the legislature. (Ravi Varma v.
Union of India 1969 (3) SCR 827: (AIR 1969 SC 1094).) When a
statute divides the objects of tax into groups or categories, so
long as there is equality and uniformity within each group the
tax cannot be attacked on the ground of its being
discriminatory, although due to fortuitous circumstances or a
particular situation some included in a class or group may get
some advantage over others, provided of course they are not
sought out for special treatment: (1963 (3) SCR 809: (AIR 1963
SC 591). Likewise the mere fact that a tax falls more heavily on
some in the same group or category is by itself not a ground
for its invalidity, for then hardly any tax, for instance, sales tax
and excise tax, can escape such a charge. (Twyford Tea Co.
Ltd. v. State of Kerala 1970 (3) SCR 383: (AIR 1970 SC 1133).)
16. Definitions of taxation imply that a legislature can impose a
tax for public purposes only. A tax for purposes other than
public purposes would constitute taking of property without
due process of law within the meaning of the Fourteenth
Amendment in the United States. It would be objectionable in
this country by reason of Art.31 (1) of the Constitution. (Cooley
on Taxation (4th ed.), Vol.1, 381, 382) Taxation, however, is,
nonetheless, for public purpose even if particular persons
receive more benefit from the use of the tax proceeds than
others. (Ibid 392).”

65. Levy of taxes, the solemn function, is an attribute of

sovereignty. It is an unavoidable necessity. No Government can run

without tax collection. The tax cannot constitute imposing regulatory

restrictions on free trade and commerce. The tax is a compulsory

collection by the State to support its welfare activities. Article 265 of

the Constitution of India provides that no tax shall be levied or collected

except by the authority of law. Therefore, there can be no levy or

collection of tax by the exercise of the executive power.

66. In State of West Bengal v Kesoram Industries Limited

& others [(2000) 1 SCC 710], it was held that the power of taxation is
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an inherent attribute of sovereignty emanating from necessity. The same

view was expressed in Yadlapati Venkateswarlu v. State of Andhra

Pradesh & another [1992 Supp (1) SCC 74].

67. Mr. Thomas Mclntyre Cooley, in his famous Treatise ‘The

Law of Taxation’, stated that ‘taxation’ is a mode of raising revenue for

the public purpose, and the power of taxation is an essential and

inherent attribute of Sovereignty, belonging as a matter of right to every

independent Government. It is a power inherent to the sovereign State

to recover a contribution of money or other property in accordance with

some reasonable rule of apportionment from the property or occupation

within its jurisdiction for the purpose of defraying public expenses.

68. In Smt Ujjam Bai v. State of Uttar Pradesh [1962 AIR

1621] the Supreme Court summed up the aspects of valid taxation as

follows:

“(1)A tax will be valid only if it is authorised by a law

enacted by a competent legislature (Article 265 of the
Constitution of India).
(2)A law which is authorized as aforesaid must further
be not repugnant to any of the provisions of the
Constitution. Thus, a law which contravenes Article 14
of the Constitution will be bad.
(3)A law which is made by a competent legislature and
which is not otherwise invalid, is not open to attack
under Article 31(1) of the Constitution.
(4)A law which is ultra vires either because the
legislature has no competence over it or it
contravenes, some constitutional inhibition has no
legal existence, and any action taken thereunder will
be an infringement of Article 19(1)(g) of the
Constitution and it would amount to a colourable piece
of legislation.
(5)where assessment proceedings are taken without
the authority of law, or where the proceedings are
repugnant to rules of natural justice, there is an
infringement of the right guaranteed under Article
19(1)(f) and Article 19(1)(g) of the Constitution.”
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The majority judgment of the above case sums up the

Constitutional limitations on the power of the State legislature to levy

taxes or enact legislation if the field is reserved for them under the

relevant entries of List II and III of the Seventh Schedule.

69. The power to levy tax is a sovereign power controlled only

by the Constitution, and any limitation on that power must be express

one. Unless and until the Court finds or arrives at a conclusion that the

Constitution itself has expressly prohibited legislation on the subject

either absolutely or conditionally, the power of the Central/State to

enact legislation within its legislative competence is a plenary power.

70. In the case of State of Karnataka v.M/s. M K Agro Tech

Private Limited [(2017) 16 SCC 210] it has been held that taxing

statutes are to be interpreted literally, and further, it is the legislature's

domain as to how the tax credit is to be given and under what

circumstances.

In paragraph 32, the Supreme Court observed as under:

“32. Fourthly, the entire scheme of the KVAT Act is to

be kept in mind and Section 17 is to be applied in that
context. Sunflower oil cake is subject to input tax. The
legislature, however, has incorporated the provision, in
the form of Section 10, to give tax credit in respect of
such goods which are used as inputs/raw material for
manufacturing other goods. Rationale behind the same
is simple. When the finished product, after
manufacture, is sold, VAT would be again payable
thereon. This VAT is payable on the price at which such
goods are sold, costing whereof is done keeping in
view the expenses involved in the manufacture of such
goods plus the profits which the manufacturer intends
to earn. Insofar as costing is concerned, element of
expenses incurred on raw material would be included.
In this manner, when the final product is sold and the
VAT paid, component of raw material would be
included again. Keeping in view this objective, the
legislature has intended to give tax credit to some
extent. However, how much tax credit is to be given
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and under what circumstances, is the domain of the

legislature and the courts are not to tinker with the
same."

Considering the decisions and discussions, it can be said that both

Central and State legislation have the power to enact the CGST/SGST

Act, and the Constitution prescribes no limitation for enacting such

legislation. Therefore, these legislations are valid legislations.

Issue No.II: What is the nature of the claim to Input Tax Credit under the

scheme of the GST Act and the Rules made thereunder?

71. The Input Tax Credit is in the nature of a benefit or

concession extended to the dealer under the statutory scheme. Even if

it is held to be an entitlement, this entitlement is subject to the

restrictions as provided under the Scheme or the Statute. The claim to

Input Tax Credit is not an absolute right, but it can be said that it is an

entitlement subject to the conditions and restrictions as envisaged in

Sections 16(2) to 16(4), Section 43, and Rules made thereunder.

72. In the case of Godrej & Boyce Manufacturing Company

Pvt. Ltd & others v. Commissioner of Sales Tax & others [(1992) 3

SCC 624], the Supreme Court, while dealing with Rules 41 and 41A of

the Bombay Sales Tax Rules 1959, held that the rule-making authority

would be empowered to provide for abridgement or curtailment while

extending a concession.

In paragraph 9 of the said judgment, the Supreme Court held as

follows:

“9. Sri Bobde appearing for the appellants reiterated

the contentions urged before the High Court. He
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submitted that the deduction of one per cent, in effect,

amounts to taxing the raw material purchased outside
the State or to taxing the sale of finished goods
effected outside the State of Maharashtra. We cannot
agree. Indeed, the whole issue can be put in simpler
terms. The appellant (manufacturing dealer)
purchases his raw material both within the State of
Maharashtra and outside the State. Insofar as the
purchases made outside the State of Maharashtra are
concerned, the tax thereon is paid to other States. The
State of Maharashtra gets the tax only in respect of
purchases made by the appellant within the State. So
far as the sales tax leviable on the sale of the goods
manufactured by the appellant is concerned, the State
of Maharashtra can levy and collect such tax only in
respect of sales effected within the State of
Maharashtra. It cannot levy or collect tax in respect of
goods which are despatched by the appellant to his
branches and agents outside the State of Maharashtra
and sold there. In law (apart from Rules 41 and 41-A)
the appellant has no legal right to claim set-off of the
purchase tax paid by him on his purchases within the
State from out of the sales tax payable by him on the
sale of the goods manufactured by him. It is only by
virtue of the said Rules which, as stated above, are
conceived mainly in the interest of public - that he is
entitled to such set-off. It is really a concession and an
indulgence. More particularly, where the
manufactured goods are not sold within the State of
Maharashtra but are despatched to out State branches
and agents and sold there, no sales tax can be or is
levied by the State of Maharashtra. The State of
Maharashtra gets nothing in respect of such sales
effected outside the State. In respect of such sales, the
rule-making authority could well have denied the
benefit of set-off. But it chose to be generous and has
extended the said benefit to such out-State sales as
well, subject, however to deduction of one per cent of
the sale price of such goods sent out of the State and
sold there. We fail to understand how a valid grievance
can be made in respect of such deduction when the
very extension of the benefit of set-off is itself a boon
or a concession. It was open to the rule-making
authority to provide for a small abridgement or
curtailment while extending a concession. Viewed
from this angle, the argument that providing for such
deduction amounts to the levy of tax either on
purchases of raw material effected outside the State
or on sale of manufactured goods effected outside the
State of Maharashtra appears to be beside the point
and is unacceptable. So is the argument about
apportioning the sale price with reference to the
proportion in which raw material was purchased
within and outside the State."
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73. In the case of India Agencies (Regd.) v. Additional

Commissioner of Commercial Taxes [(2005) 2 SCC 129] while

dealing with Rule 6(b)(ii) of the Central Sales Tax (Karnataka) Rules,

1957, which requires a provision for furnishing original Form C to claim

concessional rate of tax under Section 8(1) of the Central Sales Tax Act

1956 held that the said requirement under the rule is mandatory and

without producing the specific documents, the dealer could not be

entitled to claim benefits.

In paragraph 13 of the said judgment, the Supreme Court held as

follows:

"13. Under the Central Sales Tax (Karnataka) Rules,

1957, the dealer is required to submit along with his
return the original of the prescribed forms. As could
be seen from the rule extracted above, a registered
dealer who claims that he has made a sale to another
registered dealer is required to attach the original of
the declaration forms on the certificate in the
prescribed form received by him from the prescribed
dealer along with his return filed by him. We have
already extracted Section 13 of the Central Sales Tax
Act, which deals with the power of the Central
Government to make rules, the form and the manner
for furnishing declaration under sub-section (8) of
Section 8. Sub-section (3) of Section 13 provides that
the State Government may make rules not inconsistent
with the provisions of the Central Sales Tax Act, 1956
and the rules made under sub-section (1) to carry out
the purposes of the Act. In exercise of the powers
conferred by sub-sections (3), (4) and (5) of Section 13
of the Central Sales Tax, 1956, the Government of
Karnataka made the Central Sales Tax (Karnataka)
Rules, 1957. Under Rule 6(b)(ii) of the Karnataka
Rules, the State Government has prescribed the
procedures to be followed and the documents to be
produced for claiming concessional rate of tax under
Section 8(4) of the Central Sales Tax Act. Thus, the
dealer has to strictly follow the procedure and Rule
6(b)(ii) and produce the relevant materials required
under the said rule. Without producing the specified
documents as prescribed thereunder a dealer cannot
claim the benefits provided under Section 8 of the Act.
Therefore, we are of the opinion that the requirements
contained in Rule 6(b)(i) of the Central Sales Tax
(Karnataka) Rules, 1957 are mandatory. Sections
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12(1), (2) and (3) of the Central Sales Tax (R&T) Rules,
1957 provide that the registered dealer is required to
file the declaration and the certificate referred to in
Section 8(4) in Form C and D respectively. Form C is a
declaration divided into three parts. All the three parts
are identical, the first part of the form being the
counter foil and the second part being the duplicate
and the third part being the original. The counter foil
is to be retained by the purchasing dealer. The original
is to be filed before the Assessing Officer by the
selling dealer to claim the concessional rate. The
duplicate is to be retained by the selling dealer. If the
C Form or the original part of it is lost whilst in the
custody of the purchasing dealer or in transit, the
purchasing dealer shall have to furnish an indemnity
bond for the same as fixed by the authority concerned.
If the original part of C Form is lost by the selling
dealer whilst it is in his custody or in transit, the
selling dealer shall furnish an indemnity bond as fixed
by the authority concerned and follow the procedure
prescribed under Rule 12(3)."

74. In the case of Jayam & Co. v.Assistant Commissioner &

Another [(2016) 15 SCC 125], while interpreting the provisions of

Sections 19(20), 3(2) and 3(3) of the Tamil Nadu Value Added Tax Act

2006, it has been held that the Input Tax Credit is a form of concession

provided by the legislature. It is not admissible to all kinds of sales, and

certain specified sales are specifically excluded.

75. In ALD Automotive (P) Limited v. Commercial Tax

Officer [(2019) 13 SCC 225], considering the earlier decisions, the

Supreme Court has held that input tax credit is admissible only as per

the conditions of the Tamil Nadu Value Added Tax Act 2006. In

paragraph 43, the Supreme Court observed as under:

“43. Section 19(11) thus allowed an extended period

for input credit which if not claimed in any month can
be claimed before the end of the financial year or
before the 90 days from the date of purchase
whichever is later. The provision of Section 19(11) is
thus an additional benefit given to dealer for claiming
input credit in extended period. The use of the word
"shall make the claim" needs no other interpretation."
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76. In Union of India & others V. VKC Footsteps (India) (P)

Limited [(2022) 2 SCC 603], while considering the issue with respect

to the refund of additional ITC, the Rule limited the refund of unutilised

ITC to input goods alone.

Upholding the aforesaid rule, the Supreme Court held in

paragraphs 88 and 90 as under:

“88. The jurisprudential basis furnishes a depiction of

an ideal state of existence of GST legislation within the
purview of a modern economy, as a destination-based
tax. But there can be no gain saying the fact that fiscal
legislation around the world, India being no exception,
makes complex balances founded upon socio-economic
and concession of ITC is available on certain
conditions, and observed as under:
"11. From the aforesaid scheme of Section 19 the
following significant aspects emerge:
(a) ITC is a form of concession provided by the
legislature. It is not admissible to all kinds of sales and
certain specified sales are specifically excluded.
(b) Concession of ITC is available on certain conditions
mentioned in this section.
(c) One of the most important condition is that in
order to enable the dealer to claim ITC it has to
produce original tax invoice, completed in all respect,
evidencing the amount of input tax."
Their Lordships further held that it is a trite law that
whenever concession is given by a statute the
conditions thereof are to be strictly complied with in
order to avail such concession, and observed in
paragraph 12 as under:
"12. It is trite law that whenever concession is given
by statute or notification, etc. the conditions thereof
are to be strictly complied with in order to avail such
concession. Thus, it is not the right of the "dealers" to
get the benefit of ITC but it is a concession granted by
virtue of Section 19. As a fortiori, conditions specified
in Section 10 must be fulfilled. In that hue, we find
that Section 10 makes original tax invoice relevant for
the purpose of claiming tax. Therefore, under the
scheme of the VAT Act, it is not permissible for the
dealers to argue that the price as indicated in the tax
invoice should not have been taken into consideration
but the net purchase price after discount is to be the
basis. If we were dealing with any other aspect dehors
the issue of ITC as per Section 19 of the VAT Act,
possibly the arguments of Mr Bagaria would have
assumed some relevance. But, keeping provided. If the
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legislature has intended that the equivalence between

goods and services should be progressively realised
and that for the purpose of determining whether
refund should be provided, a restriction of the kind
which has been imposed in clause (ii) of the proviso
should be enacted, it lies within the realm of policy.
xxx xxx xxx
90. GST legislation in India is the product of hard
constitutional and legislative work which stretched
over several decades. Our fiscal regime is yet to arrive
at an ideological position of one bundle for goods and
services based on a single rate structure. Broadly
speaking, goods and services are taxed at 5%, 12%,
18% and 40%. As on date, there is an absence of
uniformity in rates and it is the multiplicity of rates
which has given rise to an inverted duty structure.
Registered persons with unutilised ITC may
conceivably form one class but it is not possible to
ignore that this class consists of species of different
hues. Given these intrinsic complexities, the
legislature has to draw the balance when it decides
upon granting a refund of accumulated ITC which has
remained unutilised. In doing so, Parliament while
enacting sub-section (3) of Section 54 has stipulated
that no refund of unutilised ITC shall be allowed other
than in the two specific situations envisaged in clauses
(i) and (ii) of the first proviso. Whereas clause (i) has
dealt with zero-rated supplies made without the
payment of tax, clause (ii), which governs domestic
supplies, has envisaged a more restricted ambit where
the credit has accumulated on account of the rate of
tax on inputs being higher than the rate of tax on
output supplies. While the CGST Act defines the
expression "input" in Section 2(59) by bracketing it
with goods other than capital goods, it is true that the
plural expression "inputs" has not been specifically
defined. But there is no reason why the ordinary
principle of construing the plural in the same plane as
the singular should not be applied. To construe
"inputs" so as to include both input goods and input
services would do violence to the provisions of Section
54(3) and would run contrary to the terms of
Explanation I which have been complexities and
diversities which permeate each society. The form
which a GST legislation in a unitary State may take
will vary considerably from its avatar in a nation such
as India where a dual system of GST law operates
within the context of a federal structure. The ideal of a
GST framework which Article 279-A(6) embodies has
to be progressively realised. The doctrines which have
been emphasised by the counsel during the course of
the arguments furnish the underlying rationale for the
enactment of the law but cannot furnish either a valid
basis for judicial review of the legislation or make out
a ground for invalidating a validly enacted law unless
it infringes constitutional parameters. While adopting
the constitutional framework of a GST regime,
Parliament in the exercise of its constituent power has
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had to make and draw balances to accommodate the

interests of the States. Taxes on alcohol for human
consumption and stamp duties provide a significant
part of the revenues of the States. Complex balances
have had to be drawn so as to accommodate the
concerns of the States before bringing them within the
umbrella of GST. These aspects must be borne in mind
while assessing the jurisprudential vision and the
economic rationale for GST legislation. But abstract
doctrine cannot be a ground for the Court to
undertake the task of redrawing the text or context of
a statutory provision. This is clearly an area of law
where judicial interpretation cannot be ahead of policy
making. Fiscal policy ought not be dictated through
the judgments of the High Courts or this Court. For it
is not the function of the Court in the fiscal arena to
compel Parliament to go further and to do more by, for
instance, expanding the coverage of the legislation (to
liquor, stamp duty and petroleum) or to bring in
uniformity of rates. This would constitute an
impermissible judicial encroachment on legislative
power. Likewise, when the first proviso to Section
54(3) has provided for a restriction on the entitlement
to refund it would be impermissible for the Court to
redraw the boundaries or to expand the provision for
refund beyond what the legislature has by a
proprietorship firm namely, M/s Jain Brothers through
its Proprietor Mr. Amit Jain.”

77. Thus, from the aforesaid decisions and discussions, the

nature of the claim for ITC by the dealer is in the nature of concession

or entitlement, which is not an absolute right and is subject to the

conditions and restrictions as per the scheme of the GST legislation.

This Court, therefore, does not find substance in the submissions of the

learned Counsel for the petitioners that Section 16(1) of the GST Act

provides an absolute right to claim Input Tax Credit and conditions in

sub-section (2) of Section 16 cannot take away the right conferred under

sub-section (1) of Section 16.

Issue No.III Whether Section 16(2)(c) and Section 16(4) of the

CGST/SGST Act infringe the Constitutional provisions and are

unsustainable?
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78. The Supreme Court in Reserve Bank of India v. Peerless

General Finance and Investments Co. Ltd & Others [(1987) 1 SCC

424] in paragraph 37 has held that the text and context of a taxing

statute cannot be construed in isolation. The context and scheme of the

Statute give meaning, and therefore, the same has to be taken into

consideration while interpreting a Statute.

Paragraph 37 of the said judgment is extracted hereunder:

“37. We would also like to query what action of

Reserve Bank of India and the Union of India are
taking or proposing to take against the mushroom
growth of 'finance and investment companies' offering
staggeringly high rates of interest to depositors
leading us to suspect whether these companies are not
speculative ventures floated to attract unwary and
credulous investors and capture their savings. One has
only to look at the morning's newspaper to be greeted
by advertisements inviting deposits and offering
interest at astronomic rates. On January 1, 1987, one
of the national newspapers published from Hyderabad,
where one of us happened to be spending the
vacation, carried as many as ten advertisements with
'banner headlines', covering the whole of the last
page, a quarter of the first page and conspicuous
spaces in other pages offering fabulous rates of
interest. At least two of the advertisers offered to
double the deposit in 30 months, 2000 for 1000,
10,000 for 5000, they said. Another advertiser offered
interest ranging between 30 per cent to 38 per cent
for periods ranging between six months to five years.
Almost all the advertisers offered extra interest
ranging between 3 per cent to 6 per cent if deposits
were made during the Christmas-Pongal season.
Several of them offered gifts and prizes. If the Reserve
Bank of India considers the Peerless Company with
eight hundred crores invested in government
securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to
say about the mushroom non-banking companies
which are accepting deposits, promising most unlikely
returns and what action is proposed to be taken to
protect the investors. It does not require much
imagination to realise the adventurous and precarious
character of these businesses. Urgent action appears
to be called for to protect the public. While on the one
hand these schemes encourage two vices affecting
public economy, the desire to make quick and easy
money and the habit of excessive and wasteful
consumer spending, on the other hand the investors
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who generally belong to the gullible and less affluent

classes have no security whatsoever. Action appears
imperative.”

79. The Goods and Services Tax laws came into force in 2017,

having the way for One India, One Market, One Tax. It is a destination-

based consumption tax with ITC available on payment of tax on supply

of goods or services at each stage available in the next stage of value

addition, removing cascading effect irrespective of the destination, be it

an intra-state or inter-state supply. The dual VAT system with uniform

rates, simultaneous levy by the Centre and the States, and a unique

IGST model ensures this destination-based tax compliance in all parts of

India. The GST system minimises the disadvantages of entirely

independent (erstwhile State VAT laws) and completely centralised

systems. The flow of ITC, along with the supply chain of registered

persons, ensures removing the cascading effect on one hand and the tax

collection by a self-assessment method in every tax period on the other

hand. It has to happen simultaneously in a financial year.

80. In Willowood Chemicals v Union of India [2018 58

GSTR 310 (Guj)], it has been held that granting tax credit cannot be

allowed to linger on indefinitely, for it would impact revenue collection

for each financial year and budgetary allocations and, in rem, revenue

deficit. Paragraphs 30 and 35 of the said judgment are extracted

hereunder:

“30. Issue can be looked at from slightly different

angle. Granting tax credit is an integral part of
computation and collection of tax. Tax collection is an
important element of budgetary allocations and
estimation of the Union and the States. Such
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consideration of tax credits at such large scale cannot

be allowed to linger on indefinitely which would have
a direct effect on the tax collection, estimates and
budgetary allocations and in turn, revenue deficit.
xxx xxx xxx
35. Thus, in the economic matters of such vast scale,
the wider considerations of the State exchequer, while
interpreting a statutory provisions cannot be kept out
of purview. Quite apart from independently finding
that the time-limit provisions contained in sub-rule (1)
of rule 117 of the CGST Rules is not ultra vires the Act
or the powers of the rule-making authority,
interpreting such powers as merely directory would
give rise to unending claims of transfer of credit of tax
on inputs and such other claims from old to the new
regime. Under the new GST laws, the existing tax
structure was being replaced by the new set of
statutes, through an exercise which was
unprecedented in the Indian context. The claims of
carry forward of the existing duties and credits during
the period of migration, therefore, had to be within the
prescribed time. Doing away with the time-limit for
making declarations could give rise to multiple large-
scale claims trickling in for years together after the
new tax structure is put in place. This would besides
making the task of matching of the credits impractical
if not impossible, also impact the revenue collection
estimates. It is in this context that the Supreme Court
in the case of Mafatlal Industries Ltd. [1998] 111 STC
467 (SC) ; [1997] 5 SCC 536, after rejecting the
contention that a person can move proceedings for
recovery of tax paid upon success of some other
person before the Tribunal or court in getting such tax
collection declared illegal, was further influenced by
the fact that any such situation could lead to utter
chaos, if the claims are large. Under the
circumstances, we do not find any substance in the
petitioners' challenge to rule 117(1) of the CGST Rules
as well as GGST Rules.”

81. When the ITC is not an absolute right but is an entitlement

subject to the conditions and restrictions prescribed under the Statute,

the conditions, restrictions and time limit specified by law form the

fulcrum on which the grant of ITC and tax collection for each financial

year are balanced. The Scheme of the Act also provides that only tax

collected and paid to the government could be given as input tax credit.

When the Government has not received the tax, a dealer cannot be
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given an input tax credit. It may be seen that under the various State

VAT laws, the twin requirements were provided for granting ITC: (a) it

was aimed to remove the cascading effect, and (b) collection of Tax for

each financial year. The State legislations had to balance this linear bar.

Under the VAT law, the ITC did not cross the originating State. The

Central Sales Tax levied on inter-state sale of goods was assigned to the

original State.

82. Under the GST regime, the tax collected has to be assigned

to the jurisdiction where the consumption takes place. The ITC,

therefore, crosses a State during inter-State supplies. Now, the scheme

of the Act prescribes the conditions, restrictions, time limit, and the

manner for availing the ITC and all together form the legal fulcrum that

balances three requirements:

(a) granting of ITC for removing cascading effect,

(b) achieving collection of tax by self-assessment method for each

financial year, and

(c) ITC transfer compliance to the destination State on inter-state

supplies through the IGST mechanism where the Centre collects tax

equivalent to CGST + SGST.

An inter-State supplier in the originating/exporting State uses his

CGST/SGST credit for payment of IGST collected. The recipient based

in the destination State will discharge his output tax liability (CGST +

SGST) by claiming credit for the IGST he paid to the inter-state supplier

in the originating State. Now, the Central and the originating State
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have an obligation to transfer the CGST and SGST component utilised

by the inter-state supplier to the IGST account so as to make it available

for the destination State. Section 53 of the CGST/SGST Act prescribes

the statutory obligation of the Central and the State Governments in this

regard, which reads as follows:

“Section 53: Transfer of Input Tax credit On

utilisation of input tax credit availed under this Act for
payment of tax dues under the Integrated Goods and
Services Tax Act in accordance with the provisions of
sub-section (5) of section 49, as reflected in the valid
return furnished under sub-section (1) of section 39,
the amount collected as central tax shall stand
reduced by an amount equal to such credit so utilised
and the Central Government shall transfer an amount
equal to the amount so reduced from the central tax
account to the integrated tax account in such manner
and within such time as may be prescribed." (State
laws have Section 53 parallel provision)

83. Considering the aforesaid scenario, without Section 16(2)(c)

where the inter-state supplier’s supplier in the originating State defaults

payment of tax (SGST+CGST collected) and the inter-state supplier is

allowed to take credit based on their invoice, the originating State

Government will have to transfer the amounts it never received in the

tax period in a financial year to the destination States, causing loss to

the tune of several crores in each tax period.

84. In my view, this renders the whole GST laws and schemes

unworkable. Therefore, as contended, the conditions cannot be said to

be onerous or in violation of the Constitution, and Section 16(2)(c) is

neither unconstitutional nor onerous on the taxpayer.

85. The collection of tax by self-assessment and the

Recovery Provisions on default are two different arms. The

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respondents cannot contend that the conditions, restrictions, and

time limits for ITC and time-bound tax collection in a financial year

can be substituted or replaced with recovery actions against

defaulters, the outcome of which is uncertain and not time-bound.

86. Section 16 of the CGST Act and Rules made thereunder

provide conditions, restrictions, time limits and manners for

availing the Input Tax Credit, which is a self-monitoring and self-

policing provision. In order to claim ITC, each registered person

has a reason and incentive to request documentation and tax

payment compliance from the person behind him in the value-

added tax chain to ensure that the ITC chain is not broken. A new

provision, Section 16(2)(aa), stands introduced with effect from

01.01.2022, providing for communication of the matching of the

recipient’s invoice with suppliers and outward supply via GSTR

2A/2B. With effect from 01.10.2022, Section 38 stands substituted

with a provision for auto-generated statement GSTR 2B, indicating

eligible and ineligible credits in respect of the inward supply.

Section 41 is also substituted providing for reversal and re-

availing of credit. Prior to that, the unamended Section 41, now

substituted, provided that the supplier can take only eligible input

tax as self-assessed in his return, and that amount would be

credited on a provisional basis to the electronic credit ledger and

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can be utilized for payment of self-assessed output tax. The

manner of crediting was also provided under Section 49(2).

87. Prior to the 01.01.2022 amendment in the CGST/SGST

Act, the eligible credit had to be determined by the taxpayer based

on the supplier’s GSTR 1 reflected in GSTR 2A and by verifying his

books of account and supplier’s GSTR 3B return filed online. This

procedure has been explained by the Supreme Court in the case of

(Union of India v. Bharti Airtel and others, [2022) 4 SCC

328].

Paragraphs 33 to 35 of the said judgment, which is extracted

hereunder: --

“33. As per the scheme of the 2017 Act, it is

noticed that registered person is obliged to do self-
assessment of ITC, reckon its eligibility to ITC and of
OTL including the balance amount lying in cash or
credit ledger primarily on the basis of his office
record and books of accounts required to be
statutorily preserved and updated from time to
time. That he could do even without the common
electronic portal as was being done in the
past till recently pre-GST regime. As regards
liability to pay OTL, that is on the basis of the
transactions effected during the relevant period
giving rise to taxable event. The supply of
goods and services becomes taxable in respect of
which the registered person is obliged to
maintain agreement, invoices/challans and books
of accounts, which can be maintained
manually/electronically. The common portal is
only a facilitator to feed or retrieve such
information and need not be the primary source
for doing self assessment. The primary source is
in the form of agreements, invoices/challans,
receipts of the goods and services and books of
accounts which are maintained by
the assessee manually /electronically. These
are not within the control of the tax authorities.
This was the arrangement even in the pre-GST
regime whilst discharging the obligation under
the concerned legislation(s). The position is no
different in the post GST regime, both in the matter
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of doing self assessment and regarding dealing with

eligibility to ITC and OTL. Indeed, that self
assessment and declarations would be any way
subject to verification by the tax authorities. The
role of tax authorities would come at the time of
verification of the declarations and returns
submitted/filed by the registered person.
34. Section 16 of the 2017 Act deals with
eligibility of the registered person to take credit of
input tax charged on any supply of goods or services
or both to him which are used or intended to be
used in the course or furtherance of his business.
The input tax credit is additionally recorded in the
electronic credit ledger of such person under the
Act. The “electronic credit ledger” is defined in
Section 2(46) and is referred to in Section 49(2) of
the 2017 Act, which provides for the manner in
which ITC may be availed. Section 41(1) envisages
that every registered person shall be entitled to take
credit of eligible input tax, as self-assessed, in his
return and such amount shall be credited on a
provisional basis to his electronic credit ledger.
35.As aforesaid, every assessee is under obligation to
self-assess the eligible ITC under Section16(1)and
16(2) and “credit the same in the electronic credit
ledger” defined in Section 2(46) read with Section
49(2) of the 2017 Act. Only thereafter, Section 59
steps in, whereunder the registered person is
obliged to self-assess the taxes payable under the
Act and furnish a return for each tax period as
specified under Section 39 of the Act. To
put it differently, for submitting return under
Section 59, it is the registered person who has
to undertake necessary measures including of
maintaining books of accounts for the relevant period
either manually or electronically. On the basis of
such primary material, self-assessment can be and
ought to be done by the assessee about the
eligibility and availing of ITC and of OTL, which is
reflected in the periodical return to be filed under
Section 59 of the Act.”

88. To complete the process and avail credit in respect of

inward supplies for a financial year, a recipient has a maximum of

18 months to a minimum of 6 months under Section 16(4) of the

Act as it stood prior to 01.01.2022 for getting his invoice/debit

note uploaded by the supplier of the tax paid and maximum 20

months to minimum 8 months after that. The time frame made it a

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reasonable mechanism for availing ITC in GST Laws. This time

limit is not a new phenomenon for availing the ITC. The different

VAT legislations and CENVAT Credit Rules provided time limits to

claim eligible ITC Under Rule 4 of the Cenvat Credit Rules, 2004,

where a one-year limit was prescribed for ITC. The GST Laws, in

fact, prescribe a larger time limit.

89. Subsection 2 of Section 16 begins with the non-obstante

clause and further says, “no registered person shall be entitled to

the credit of any input tax…..”. Sub-section (2) of Section 16 is in

double negative format, and the conditions provided are restrictive

conditions and not conditions of eligibility, as held by the Supreme

Court in the case of VKC Footsteps (India) P Ltd (supra).

Paragraphs 86 and 87 of the said judgment which are

relevant are extracted hereunder:-

86. The above submissions demonstrate the

scholarship which has been brought to bear upon the
controversy by Counsel appearing on behalf of the
assessees. The above aspects of the statutory
provisions Section 54(3) must be juxtaposed together
with all the features of the statutory provision
including Explanation-1 which have been adverted to
earlier. The analysis earlier indicates why on a
reading of the provision as a whole, clauses (i) and (ii)
of the first proviso are restrictions and not mere
conditions of eligibility. It is not possible for the Court
to restrict the ambit of clause (ii) of the proviso, based
on a circular which has been issued by the Ministry of
Finance on 31 December 2018. In substance, the
argument boils down to an effort to lead this Court to
hold that in spite of the language which has been
used in clause (ii) of the first proviso (where the
credit is accumulated on account of rate of tax on
inputs being higher than the rate of tax on output
supplies), input services must be read into the term
"inputs". The assessees argue that the Departmental
understanding, as reflected in the circular, should be
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the basis of interpreting a statutory provision. Such

an exercise would be impermissible, when its effect is
to expand the area of refund contemplated by the first
proviso to cover input services in addition to input
goods despite statutory language to the contrary. Sub-
Section (3) of Section 54 begins, in its main part, with
the stipulation that a registered person may claim
refund of any 'unutilised ITC at the end of any tax
period’. Whether we construe the first proviso as an
exception or in the nature of a fresh enactment, the
clear intent of Parliament was to confine the grant of
refund to the two categories spelt out in clauses (i)
and (ii) of the first proviso. That clauses (i) and (ii) are
the only two situation in which a refund can be
granted is evident from the opening words of the first
proviso which stipulates that "no refund of
unutilised input tax credit shall be allowed in
cases other than". What follows is clauses (i) and
(ii). The intent of Parliament is evident by the use of a
double negative format by employing the expression
"no refund" as well as the expression "in cases other
than". In other words, a refund is contemplated in the
situations provided in clauses (1) and (ii) and no
other. To put it differently, the first proviso can be
recast, without altering its meaning to read that a
refund of unutilised ITC shall be allowed only in the
cases governed by clauses (i) and (ii). Clause (i) deals
with zero rated supplies without payment of tax.
Explanation-1 to Section 54 clarifies that the
expression 'refund' includes refund of tax paid on zero
rated supplies on goods or services or both, or on
inputs or input services used in making such zero-
rated supplies. On the other hand, in the case of
deemed exports, Explanation-1 refers to a refund of
tax on the supply of goods. Likewise in regard to
domestic supplies Governed by clause (ii) of the first
proviso, the expression ‘refund’ means refund of
unutilized ITC as provided under sub-section (3). With
clear language which has been adopted by Parliament
while enacting the provisions of Section 54 (3), the
acceptance of the submissions which has been urged
on behalf of the assessee would involve a judicial re-
writing of the provision which is impermissible in law.
Clause (ii) of the proviso when it refers “ on account
of “ clearly intends the meaning which can ordinarily
be said to imply ‘ because of or due to’. When proviso
(ii) refers to “ rate of tax”, it indicates a clear intent
that a refund would be allowed where and only if the
inverted duty structure has arisen due to the rate of
tax on input being higher than the rate of tax on
output supplies. Reading the expression ‘input’ to
cover input goods and input services would lead to
recognizing an entitlement to refund, beyond what
was contemplated by Parliament.
87. We must be cognizant of the fact that no
constitutional right to being asserted to claim a
refund, as there cannot be. Refund is a matter of a
statutory prescription. Parliament was within its
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legislative authority in determining whether refunds

should be allowed of unutilised ITC tracing its origin
both to input goods and input services or, as it has
legislated, input goods alone. By its clear stipulation
that a refund would be admissible only where the
unutilised ITC has accumulated on account of the rate
of tax on inputs being higher than the rate of tax on
output supplies, Parliament has confined the refund in
the manner which we have described above. While
recognizing an entitlement to refund, it is opened to
the legislature to define the circumstances in which
refund can be claimed. The proviso to Section 54(3) is
not a condition of eligibility (as the assesses’s counsel
submitted) but a restriction which must governed the
grant of refund under Section 54(3). we therefore,
accept the submission which has been urged by Mr.
N. Venkataraman, learned ASG.

90. Thus, the non-obstante clause in the negative sentence

in Section 16(2) restricts the eligibility under Section 16(1) for

entitlement to claim ITC. Section 16(2) is the restriction on

eligibility and Section 16(4) is the restriction on the time for

availing ITC. These provisions cannot be read to restrict other

restrictive provisions, i.e., Section 16(3) and 16(4). If Section 16(2)

is read in the manner as contended by the learned counsel for the

petitioners, i.e., once the conditions under Section 16(2) are met,

the timeline provided for availing the input tax credit under

Section 16(4) is arbitrary and unsustainable and cannot be

accepted.

91. Few High courts have upheld the constitutional validity

of Section 16(2) (c) and 16(4). The Andhra Pradesh High Court in

Thirumalakonda Plywoods v. Assistant Commissioner [2023

SCC Online AP 1476] in paragraph 19 as held as under: -

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“19. When analyzed, Section 16(2) shall not appear to

be a provision which allows input tax credit, rather
ITC enabling provision is Section 16(1). On the other
hand, Section 16(2) restricts the credit which is
otherwise allowed to only such cases where
conditions prescribed in it are satisfied. Therefore,
Section 16(2) in terms only overrides the provision
which enables the ITC i.e., Section 16(1). This is
evident from the manner in which Section 16(2) is
couched. The non obstante clause in Section 16(2) is
followed by a negative sentence “no registered person
shall be entitled to the credit of any input tax in
respect of any supply of goods or services or both to
him unless”. This negative sentence pellucidly tells
that unless the conditions mentioned in Section 16(2)
are satisfied, no credit will be eligible. This stipulation
manifests that Section 16(2) is not an enabling
provision but a restricting provision. What it restricts
is the eligibility which was otherwise given U/s 16(1).
(a) It should be noted, when a non obstante clause is a
mere restricting provision, an interpretation that the
other restricting provisions will not have effect or that
the restricting provision will restrict other restricting
provisions cannot be accepted for the reason that
there is no contradiction between the restricting
clause followed by non obstante and other restricting
provisions.
In R.S. Raghunath’s case (supra-21) the Apex Court
held thus:
“11. Xxxx. The non-obstante clause is sometimes
appended to a section or a rule in the beginning with
a view to give the enacting part of that section or rule
in case of conflict, an overriding effect over the
provisions or act mentioned in that clause. Such a
clause is usually used in the provision to indicate that
the said provision should prevail despite anything to
the contrary in the provision mentioned in such non-
obstante clause.
” Hence unless such clear inconsistency is
established, overriding effect cannot be given over
other provisions. In the present case both Section
16(2) and (4) are two different restricting provisions,
the former providing eligibility conditions and the
later imposing time limit. However, both these
provisions have no inconsistency between them. In
R.S. Raghunath, the Apex Court further observed
thus:
“But the non-obstante clause need not necessarily and
always be co-extensive with the operative part so as
to have the effect of cutting down the clear terms of
an enactment and if the words of the enactment are
clear and are capable of a clear interpretation on a
plain and grammatical construction of the words the
non-obstante clause cannot cut down the construction
and restrict the scope of its operation. In such cases
the non-obstante clause has to be read as clarifying
the whole position and must be understood to have
been incorporated in the enactment by the
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Legislature by way of abundant caution and not by

way of limiting the ambit and scope of the Special
Rules.

” Further, the influence of a non obstante clause has

to be considered on the basis of the context also in
which it is used. Therefore, Section 16(4) being a non-
contradictory provision and capable of clear
interpretation, will not be overridden by non obstante
provision U/s 16(2). As already stated supra 16(4)
only prescribes time restriction to avail credit. For
this reason, the argument that 16(2) overrides 16(4)
is not correct. Thus, in substance Section 16(1) is an
enabling clause for ITC; 16(2) subjects such
entitlement to certain conditions; Section 16(3) and
(4) further restrict the entitlement given U/s 16(1).
That being the scheme of the provision, it is out of
context to contend that one of the restricting
provisions overrides other two restrictions. The issue
can be looked into otherwise also. If really the
legislature has no intention to impose time limitation
for availing ITC, there was no necessity to insert a
specific provision U/s 16(4) and to further intend to
override it through Section 16(2) which is a futile
exercise.”

92. Section 16(1) is subject to Section 49 and Section 16(2)

(c) is subject to Section 41. Eligible ITC is self-assessed in the

GSTR 3B return, and only then it is credited to the electronic

credit ledger, which can be utilised for payment of tax. The

Supreme Court in Union of India v. Bharati Airtel and others

(supra) has explained the procedure for availing the input tax

credit under the GST laws. [As has been extracted in paragraph

86 of this judgment].

93. The Patna High Court in Gobinda Construction and

others v. Union of India and others [MANU/BH/1260/2023] ,

after placing reliance on the judgment in Jayam, ALD (supra) has

upheld the constitutional validity of Section 16(4) and held that

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the concession/claim to ITC is not an absolute legal right.

Paragraphs 22 to 30 of the said judgment are extracted

hereunder:-

“22. In the background of the above noted discussions, we

need to examine first as to whether or not, the language of
Section 16 of the CGST/BGST Act suffers from any
ambiguity. Sub-section (1) of Section 16 , which provides for
ITC, states that every registered person shall be entitled to
take credit of input tax charged on any supply of goods or
services or both to them, which are used or intended to be
used in accordance with the furtherance of his business and
the said amount shall be credited to the electronic credit
ledger of such person. This entitlement of ITC is, however,
subject to :-
(a) such conditions and restrictions as may be prescribed
and,
(b) in the manner specified in Section 49
23. Sub-section (2) of Section 16 is a non obstante clause
and clearly states that no registered person shall be entitled
to the credit of input tax in respect of any supply of goods or
services or both unless he fulfills the requirements and
satisfies the existence of other conditions prescribed in
Clauses (a) to (d) thereof.
24. Sub-section (3) of Section 16 contemplates yet another
circumstance when ITC on tax component cannot be
allowed, i.e., where the registered person has claimed
depreciation on the tax component of cost of capital goods
and plant and machinery under the provisions of the Income
Tax Act, 1961.
25. Lastly comes the offending clause which is under
challenge i.e. sub-section (4) of Section 16 of the
CGST/BGST Act, which, in no unambiguous terms, provides
that a registered person shall not be entitled to take ITC in
respect of any invoice or debit note for supply of goods or
services or both after 30th day of November (post
amendment), following the end of financial year to which
such invoices or debit note pertain or furnishing of the
relevant annual return, whichever is earlier. The language
of Section 16 of the CGST/BGST Act suffers from no
ambiguity and clearly stipulates grant of ITC subject to the
conditions and restrictions put thereunder.
26. At the cost of repetition, we note here that ITC is not
unconditional and a registered person becomes entitled to
ITC only if the requisite conditions stipulated therein are
fulfilled and the restrictions contemplated under sub-section
(2) of Section 16 do not apply. One of the conditions to make
a registered person entitled to take ITC is prescribed under
sub-section (4) of Section16. The right of a registered
person to take ITC under sub-section (1) of Section 16 of the
Act becomes a vested right only if the conditions to take it
are fulfilled, free of restrictions prescribed under sub-
section (2) thereof. In order to invoke Article 300-A of the
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Constitution by a person, two circumstances must jointly

exist :-
(i) Deprivation of property of a person
(ii) Without sanction of law
27. We have briefly dealt with what the expression
'property' connotes as explained in case of Jilubhai
Nanbhai Khachar (supra), paragraph 42 of which reads
thus :-
"42. Property in legal sense means an aggregate of rights
which are guaranteed and protected by law. It extends to
every species of valuable right and interest, more
particularly, ownership and exclusive right to a thing, the
right to dispose of the thing in every legal way, to possess it,
to use it, and to exclude everyone else from interfering with
it. The dominion or indefinite right of use or disposition
which one may lawfully exercise over particular things or
subjects is called property. The exclusive right of
possessing, enjoying, and disposing of a thing is property in
legal parameters. Therefore, the word 'property' connotes
everything which is subject of ownership, corporeal or
incorporeal, tangible or intangible, visible or invisible, real
or personal; everything that has an exchangeable value or
which goes to make up wealth or estate or status. Property,
therefore, within the constitutional protection, denotes
group of rights inhering citizen's relation to physical thing,
as right to possess, use and dispose of it in accordance with
law. In Ramanatha Aiyar's The Law Lexicon, Reprint Edn.,
1987, at p. 1031, it is stated that the property is the most
comprehensive of all terms which can be used, inasmuch as
it is indicative and descriptive of every possible interest
which the party can have. The term property has a most
extensive signification, and, according to its legal definition,
consists in free use, enjoyment, and disposition by a person
of all his acquisitions, without any control or diminution,
save only by the laws of the land. In Dwarkadas Shrinivas
case [1950 SCC 833 : 1950 SCR 869 : AIR 1951 SC 41] this
Court gave extended meaning to the word property. Mines,
minerals and quarries are property attracting Article 300-A.
28. Upon close reading of sub-section (1) of Section 16 of
the CGST/ BGST Act, we are of the view that the provision
under sub-section (4) of Section 16 is one of the conditions
which makes a registered person entitled to take ITC and by
no means sub-section (4) can be said to be violative of
Article 300-A of the Constitution of India.
29. We are not convinced with the submissions advanced on
behalf of the petitioners to read down the provision of sub-
section (4) of Section 16 of the CGST/ BGST Act since we
see neither any reason nor a necessity to do it. We have
mentioned in the beginning, the situations which may
require reading down a statutory provision. There is always
a presumption of constitutional validity of a legislation, with
the burden of showing the contrary, lying heavily upon
someone who challenges its validity.
30. Submissions have been advanced on behalf of the
petitioners that sub-section (4) of Section 16 imposes
unreasonable and disproportionate restriction on the right
to freedom of trade and profession guaranteed under Article
19(1)(g) of the Constitution and is, therefore, violative of
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Article 302 of the Constitution and is in teeth of Article 13

of the Constitution. This argument is founded on the ground
of absence of any rationale behind fixation of a cut-off-date
for filing of return. We do not find any merit in the
submissions so advanced, which deserves to be outrightly
rejected.”

94. Another Division Bench of Patna High Court in Aastha

Enterprises v. State of Bihar & others

[MANU/BH/1034/2023] has held that Section 16(2)(c) is

constitutionally valid. The claim of the ITC would be admissible

only if the supplier pays the tax. It has been said that in the

concession, there is no question of double taxation. The seller and

the purchaser have an independent contract without the

jurisdiction of the Government, and if the seller dealer fails to

remit the tax collected from the purchaser dealer to the

Government, the purchaser dealer would have an independent

right to recover from the supplier. The Government can also finally

recover from the seller dealer the amount unpaid by him after

collecting from the purchaser dealer.

Paragraphs 11 to 14 of the said judgment have been held as

under:

“11. It is true that Input Tax Credit is a concept introduced in the

tax regime, all over the country for the purpose of avoiding the
cascading effect of taxes. The benefit of such credit being availed
by a purchasing dealer who sells or manufactures goods, using
raw materials on which tax has been paid is a benefit or
concession conferred under the statute as has been held in ALD.
Automobile Private Limited. Necessarily, the conditions for such
availment of credit has to be scrupulously followed failing which
there can be no benefit conferred on the assessee. The benefit is
one conferred by the statute and if the conditions prescribed in
the statute are not complied; no benefit flows to the claimant.
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12. The contention of double taxation does not impress us

especially since the claim is denied only when the supplier who
collected tax from the purchaser fails to pay it to the Government.
Taxation as has been held is a compulsory extraction made for the
purpose of public good, by the welfare State and without the levy
being paid to the Government; there can be no claim raised of the
liability to tax having been satisfied and hence there is no
question of double taxation.
13. The further contention raised by the assessee is also one of
the statute having provided measures to recover the collected tax,
which the selling dealer fails to pay to the Government. The mere
fact that there is a mode of recovery provided under the statute
would not absolve the liability of the tax payer to satisfy the entire
liability to the Government. The purchasing dealer being the
person who claims Input Tax Credit could only claim the Input Tax
benefit if the supplier who collected the tax from the purchaser
has paid it to the Government and not otherwise. The Government
definitely could use its machinery to recover the amounts from
the selling dealer and if such amounts are recovered at a later
point of time, the purchasing dealer who paid the tax to its
supplier could possibly seek for refund. However, as long as the
tax paid by the purchaser to the supplier, is not paid up to the
Government by the supplier; the purchaser cannot raise a claim of
Input Tax Credit under the statute. We have to notice that the
word ‘Input Tax Credit’ itself postulates a situation where the
purchasing dealer has a credit in the ledger account maintained
by it with the Government. The said credit can only arise when
the supplier pays up the tax collected from the purchaser. The
mere production of a tax invoice, establishment of the movement
of goods and receipt of the same and the consideration having
been paid through bank accounts would not enable the Input Tax
Credit; unless the credit is available in the ledger account of the
purchasing dealer who is an assessee.
14. The seller and purchaser have an independent contract
without the junction of the Government. The statute provides for a
levy of tax on goods and services or both, supplied by one to the
other which can be collected but the dealer who collects it has
also the obligation to pay it up to the State. The statutory levy and
the further benefit of Input Tax Credit conferred on the
purchasing dealer depends not only upon the collection by the
seller but also the due payment by the seller to the Government.
When the supplier fails to comply with the statutory requirement,
the purchasing dealer cannot, without credit in his account claim
Input Tax Credit and the remedy available to the purchasing
dealer is only to proceed for recovery against the seller. Even if
such recovery from the supplier is effected by the purchasing
dealer; the State would be able to recover the tax amount
collected and not paid to the exchequer, from the selling dealer
since the rigor of the provisions for recovery on failure to pay up,
after collecting tax, enables the Government so to do.”

95. The Supreme Court in the case of Mahalaxmi Cotton

Ginning Pressing and Oil Industries vs. The State of

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Maharashtra and others [MANU/MH/0620/2012], while

interpreting Section 48(5) of Maharashtra Value Added Tax Act,

2002, and upholding its constitutionality held that set off is

impermissible without any tax being received into the Government

treasury. It has been held that set off would be available where

the tax has been deposited in the treasury and to that extent, the

entitlement to set-off is created by the statute, in terms of which

the set-off is granted under the legislation must be strictly

observed.

96. Subsection 48 of the Maharashtra Value Added Tax Act,

2002 would read as under:

“48. Set-off, refund, etc.:-

(1) The State Government may, by rules, provide that,-
(a) in such circumstances and subject to such
conditions and restrictions as may be specified in the
rules, a set-off or refund of the whole or any part of
the tax,-
(i) paid under any earlier law in respect of any earlier
sales or purchases of goods treated as capital assets
on the day immediately preceding the appointed day
or of goods which are held in stock on the appointed
day by a person who is a dealer liable to pay tax
under this Act, be granted to such dealer;or.
(ii) paid in respect of any earlier sale or purchase of
goods under this Act be granted to the purchasing
dealer; or
(iii)paid under the Maharashtra Tax on Entry of Motor
Vehicles into the Local Areas Act, 1987 (Mah. XLII of
1987) be granted to the dealer purchasing or
importing motor vehicles; or
(iv) paid under the Maharashtra Tax on Entry of
Goods into the Local Areas Act, 2002, be granted to
the dealer;
(b) for the purpose of the levy of tax under any of the
provisions of this Act, the sale price may in the case of
any class of sales be reduced to such extent, and in
such manner, as may be specified in the rules.
(2)No set-off or refund as provided by any rules made
under this Act shall be granted to any dealer in
respect of any purchase made from a registered
dealer after the appointed day, unless the claimant
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dealer produces a tax invoice, containing a certificate

that the registration certificate of the selling dealer
was in force on the date of sale by him and the due
tax, if any, payable on the sale has been paid or shall
be paid and unless such certificate is signed by the
selling dealer or a person duly authorised by him.
(3) Subject to the provisions contained in subsection
(4), where no tax has been charged separately under
any earlier law, the rate of tax applicable for the
purposes of calculating the amounts of set off, or
refund in respect of any earlier sale or purchase of
goods, or for the purposes of reduction of sale or
purchase price for levy of tax, shall be the rate setout
against the goods in the relevant Schedule under any
earlier law.
(4)Where, under any notification issued under this Act
or as the case may be, any earlier law, any sale or
purchase of goods has been exempted from the
payment of whole of sales tax or purchase tax, then,
for the purposes of sub-section (3), the rate of tax
applicable shall be nil; and where it is exempted from
payment of any part of sales tax (or purchase tax), the
rate of tax applicable shall be the rate at which the
payment of tax is to be made by virtue of such
exemption.
(5)For the removal of doubt it is hereby declared that,
in no case the amount of set-off or refund on any
purchase of goods shall exceed the amount of tax in
respect of the same goods, actually paid, if any, under
this Act or any earlier law, into the Government
treasury except to the extent where purchase tax is
payable by the claimant dealer on the purchase of the
said goods effected by him :
Provided that, where tax levied or leviable under this
Act or any earlier law is deferred or is deferrable
under any Package Scheme of Incentives
implemented by the State Government, then the tax
shall be deemed to have been received in the
Government Treasury for the purposes of this sub-
section.
(6)Where at any time after the appointed day, a dealer
becomes entitled to a refund whether under any
earlier law or under this Act, then such refund shall
first be applied against the amount payable, if any,
under any earlier law or this Act and the balance
amount, if any, shall be refunded to the dealer.”

97. Paragraph 38 of the judgment of Mahalaxmi Cotton

Ginning Pressing (supra) is extracted hereunder: -

38. Section 48(5) uses the expression "actually paid"

into the Government treasury. The words "actually
paid" must receive their ordinary and natural
meaning. A set off under Section 48(5) would be
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allowable only to the extent of the tax, if any, that has

been actually paid into the treasury in respect of the
purchase tax paid on the same goods. The use of the
word "actually" in conjunction with the word "paid"
leaves no manner of doubt about the legislative
intent. A set off is available where tax has been
deposited in the treasury and to the extent of the tax
deposited. Where no tax has been deposited in the
treasury, there is no tax actually paid in respect of
which a set off can be granted. In State of Madhya
Pradesh vs. Indore Iron and Steel Mills Pvt. Ltd.,18
MANU/SC/0637/1998: AIR 1998 SC 3050 the
Supreme Court considered the provisions of a
notification issued under the Madhya Pradesh
General Sales Tax Act, 1958 which contained a
condition that the goods "had suffered entry
tax"under a particular enactment before they were
purchased by the registered dealer. Interpreting the
words "suffered entry tax", the Supreme Court held
that it is only where the entry tax had actually been
paid that the exemption would arise:
In our view, the words of the said notification under
the State Sales Tax Act are so clear that they leave no
doubt whatsoever and cannot be subjected to any
construction but one, namely, that only goods upon
which entry tax under the Entry Tax Act has been paid
are entitled to the exemption thereunder. There has to
be actual payment.The impact of the entry tax upon
the goods for which the exemption is sought has to be
felt; only then is the exemption available. The use of
the word "suffered" makes this plain.
There is no reason for the Court to depart from the
plain and ordinary meaning of the words "actually
paid", when used in the context of Section 48(5).

98. In Willowood Chemicals vs. Union of India [2018

(58) GSTR 310 (Guj)], in Paragraphs 30 and 35, it has been held

that conditions restrictions and time limit are crucial for granting

ITC and collection of tax of each financial year, otherwise, it would

impact revenue collection, budgetary allocation and in rem

revenue deficite. [Paragraphs 30 and 35 of the said judgment are

extracted in paragraph 79 of this judgment.]

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Conclusion:

99. The Government had realized the difficulty in the initial

roll out of the GST regime under the CGST/SGST Act and

considered that GSTR 2A was not available initially in the Finance

years, 2017-2018 and 2018-2019, during the implimentation of

GST. In order to resolve all bona fide claims and mistakes,

Circular No.183/15/2022- GST dated 27.12.2022 and Circular No.

193/05/2023- GST dated 17.07.2023 have been issued. Circulars

cover the period from the introduction of GST till Section 16(2)(aa)

was introduced with effect from 01.01.2022. The ITC can be

availed by the recipient for the bona fide scenarios listed in those

Circulars on submitting proof of payment to the Government by

the supplier. Therefore, if, during the pendency of these writ

petitions, the petitioners who could have got the benefits of these

Circulars and could not avail the benefits within the time limit

prescribed, may approach the appropriate GST authority within a

period of thirty days from today to avail the benefit of the

aforesaid Circulars, if the same is/are applicable to their case. The

GST authorities will examine the claim of the individual dealer by

applying the provisions of the Circulars, and it will grant

applicable relief to eligible dealers.

100. Prior to the amendment in Section 39 by the Finance

Act 2022, the date for furnishing the return under Section 39 was
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30th September. Considering the difficulties in the initial stage of

the implementation of the GST regime, its understanding, and

compliance, the Legislature effected the amendment and extended

the time for filing the return for September to 30 th November in

each succeeding Financial Year. The amendment is only

procedural to ease the difficulties initially faced by the dealers /

taxpayers. Therefore, where for the period from 01.07.2017 till

30.11.2022, if a dealer has filed the return after 30 th September

and the claim for ITC was made before 30 th November, the claim

for ITC of such dealer should also be processed if he is otherwise

entitled to claim the ITC. It has been pointed out in several cases

which are pending before this Court that the claim was made

before 30th November of the succeeding Financial Year, but the

relevant period was 20th October, which was the extended date for

furnishing the return under Section 39 for the month of

September. Therefore, if a person has furnished the return for the

month of September till 30th November, their claim should also be

considered and processed and should not be rejected if the dealer

did not furnish the return for the month of September on or before

20th October. This amendment being procedural has to be given

retrospective effect and, therefore, it is provided that it should be

treated that the time limit for furnishing the return for the month

of September is 30th November in each Financial Year with effect

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from 01.07.2017, considering the peculiar nature of difficulties in

the initial period of implementation of the GST regime. So far as

the challenge to the constitutional validity of Section 16(2)(c) and

Section 16(4) is concerned, the same is rejected.

Result:

101. The liberty is granted to the petitioners, who can claim

the benefit of the two Circulars, namely, Circular No. 183/15/2022-

GST dated 27.12.2022 and Circular No. 193/05/2023- GST dated

17.07.2023 to make their claim within one month from today

before the appropriate authority who shall examine the claim of

the individual dealer and process the claim.

101.1 The time limit for furnishing the return for the month

of September is to be treated as 30 th November in each financial

year with effect from 01.07.2017, in respect of the petitioners who

had filed their returns for the month of September on or before

30th November, and their claim for ITC should be processed, if

they are otherwise eligible for ITC.

The writ petitions are hereby disposed of. All Interlocutory

Applications as regards interim matters stand closed.

Sd/-

DINESH KUMAR SINGH

JUDGE
SJ
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APPENDIX OF WP(C) 31559/2019

PETITIONER EXHIBITS
EXHIBIT P1 COPY OF NOTIFICATION NO.49/2019 ISSUED BY
THE 1ST RESPONDENT DATED 09.10.2019.
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APPENDIX OF WP(C) 25891/2020

PETITIONER EXHIBITS
EXHIBIT P1 TRUE COPY OF THE FORM GSTR 3B FROM JULY,
2017 TO MARCH, 2018 FOR GSTIN
32AADFP6131E1ZR.
EXHIBIT P2 TRUE COPY OF THE FORM GSTR 9 FOR 2017-18
FOR GSTIN 32AADFP3161E1ZR.
EXHIBIT P3 TRUE COPY OF THE NOTICE DATED 8.7.2020 IN
FORM GST ASMT 10 FOR 2017-18 FOR GSTIN
32AADFP6131E1ZR.
EXHIBIT P4 TRUE COPY OF THE REPLY DATED 27.07.2020
IN FORM GST ASMT 11 FOR 2017-18 FOR GSTIN
32AADFP6131E1ZR.
EXHIBIT P5 TRUE COPY OF THE REPLY DATED 27.07.2020
IN FORM GST DRC-01A FOR 2017-18 FOR GSTIN
32AADFP6131E1ZR.
EXHIBIT P6 TRUE COPY OF THE GSTR 2A FOR 2017-18 FOR
GSTIN 32AADFP6131E1ZR.
EXHIBIT P7 TRUE COPY OF THE PURCHASE LEDGER OF ANNA
PLASTICS FOR 2017-18 WITH RELEVANT
INVOICES.
EXHIBIT P8 TRUE COPY OF THE LEDGE ACCOUNT OF THE 9TH
RESPONDENT WITH THE PETITIONER.
EXHIBIT P9 TRUE COPY OF THE DETAILS OF 9TH
RESPONDENT WITH GSTIN 32AFCPJ0127N1ZS IN
GST NETWORK.
EXHIBIT P10 TRUE COPY OF THE RELEVANT PROVISIONS OF
SECTION 16 IN CENTRAL GOODS AND SERVICE
TAX ACT, 2017.
EXHIBIT P11 TRUE COPY OF THE CIRCULAR NO.F.NO.CBEC-
20/06/14/2019-GST DATED 11.11.2019 ISSUED
BY THE GOVERNMENT OF INDIA.
EXHIBIT P12 TRUE COPY OF THE NOTIFICATION NO.49/2019-
CENTAL TAX DATED 09.10.2019 ISSUED BY THE
GOVERNMENT OF INDIA.
EXHIBIT P13 TRUE COPY OF THE INTERIM ORDER IN WPC NO.
31559 OF 2019 DATED 14-10-2022
EXHIBIT P14 TRUE COPY OF THE NOTICE DATED 22-06-2023
ISSUED BY THE 3RD RESPONDENT TO THE
PETITIONER
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APPENDIX OF WP(C) 26515/2021

PETITIONER EXHIBITS
EXHIBIT P1 THE TRUE COPY OF DISTRIBUTION AGREEMENT
DATED 31.1.2018, ENTERED INTO BETWEEN
PETITIONER AND FIRST RESPONDENT
EXHIBIT P2 THE TRUE COPY OF REGISTRATION CERTIFICATE
DATED 18.7.2018 OF THE FIRST RESPONDENT
EXHIBIT P3 THE TRUE COPY OF SHOW CAUSE NOTICE NO
32AAICM8997RIZA/2018-18 DATED 6.7.2021
ISSUED BY STATE TAX OFFICER FIRST CIRCLE
STATE GOODS AND SERVICE TAX DEPARTMENT
KOZHIKODE
EXHIBIT P4 THE TRUE COPY OF RECEIPT OF COMPLAINT
DATED 20.10.2021, FILED BY THE PETITIONER
AGAINST THE FIRST RESPONDENT
EXHIBIT P5 THE TRUE COPY OF NOTIFICATION NO 49/2019-
CENTRAL TAX DATED 9.10.2019 ISSUED BY
GOVERNMENT OF INDIA, MINISTRY OF FINANCED
CENTRAL BOARD OF INDIRECT TAXES AND
CUSTOMS
EXHIBIT P6 THE TRUE COPY OF NOTIFICATION NO 75/2019-
CENTRAL TAX DATED DATED 26.12.2019 ISSUED
BY GOVERNMENT OF INDIA, MINISTRY OF
FINANCE, CENTRAL BOARD OF INDIRECT TAXES
AND CUSTOMS
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APPENDIX OF WP(C) 5995/2022

PETITIONER EXHIBITS
EXHIBIT P1 A TRUE COPY OF THE NOTICE IN FORM GST
ASMT -10 DATED 30.07.2020.
EXHIBIT P2 A TRUE COPY OF THE REPLY FILED BY THE
PETITIONER DATED 20.07.2021.
EXHIBIT P3 A TRUE COPY OF THE ASSESSMENT ORDER U/S.
73 DATED 01.02.2022.
EXHIBIT P3(A) A TRUE COPY OF THE PROCEEDINGS OF
ASSESSMENT DATED 31.1.2021.
EXHIBIT P3(B) A TRUE COPY OF THE NOTICE OF DEMAND IN
FORM GST DRC - 07.
ANNEXURE A A COPY OF JUDGMENT IN THE STATE OF
KARNATAKA VS. M/S. ECOM GILL COFFEE
TRADING PRIVATE LIMITED (2023 (3) TMI 533
SC)
ANNEXURE B A COPY OF JUDGMENT IN SUNCRAFT ENERGY [P]
LTD AND ANR VS. THE ASSISTANT
COMMISSIONER, STATE TAX, BALLYGUNGE
CHARGE AND OTHERS (MAT 1218 OF 2023
DATED: 02.08.2023)
ANNEXURE C A COPY OF JUDGMENT IN COMMISSIONER OF
CENTRAL EXCISE, JALANDHAR VS. KAY KAY
INDUSTRIES, (2013 (8) TMI 772 - SC)
ANNEXURE D A COPY OF JUDGMENT IN ARISE INDIA LTD.
VS. COMMISSIONER OF TRADE AND TAXES [TS-
314-HC2017(DEL)-VAT],
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APPENDIX OF WP(C) 21545/2022

PETITIONER EXHIBITS
EXHIBIT P1 TRUE COPY OF GSTR 3B MONTHLY ONLINE
RETURNS SUBMITTED FOR THE PERIOD APRIL
2021 TO SEPTEMBER 2021.
EXHIBIT P2 TRUE COPY OF NOTICE IN GST ASMT-10 DATED
24/12/2021 ISSUED TO PETITIONER BY 4TH
RESPONDENT.
EXHIBIT P3 TRUE COPY OF REPLY DATED 27/12/2021
SUBMITTED BEFORE 1ST RESPONDENT AGAINST
EXT.P2 NOTICE.
EXHIBIT P3A TRUE COPY OF LETTER DATED 22/02/2022
SUBMITTED BEFORE 4TH RESPONDENT ALONG
WITH E-MAIL RECEIVED FROM CUSTOMS
DEPARTMENT.
EXHIBIT P4 TRUE COPY OF INTIMATION IN FORM GST DRC-
01A DATED 16/05/2022 ISSUED BY 4TH
RESPONDENT, ALLEGING EXCESS INPUT TAX
CREDIT AVAILED BY PETITIONER BY SCRUTINY
OF GSTR 3B RETURN WITH GSTR 2A FOR THE
PERIOD APRIL TO SEPT. 2021.
EXHIBIT P5 TRUE COPY OF REPLY DATED 24/06/2022
SUBMITTED BEFORE 4TH RESPONDENT AGAINST
EXT.P4 INTIMATION, ALONG WITH SUPPORTING
DOCUMENTS.
EXHIBIT P6 TRUE COPY OF THE PRESS RELEASE DATED
04/05/2018 ISSUED BY THE CBIC.
EXHIBIT P7 TRUE COPY OF THE PRESS RELEASE DATED
18/10/2018 ISSUED BY THE CBIC.
EXHIBIT P8 TRUE COPY OF THE CIRCULAR BEARING
NO.123/42/2019-GST DATED 11/11/2019
ISSUED BY THE MINISTRY OF FINANCE,
GOVERNMENT OF INDIA.
EXHIBIT P9 TRUE COPY OF THE JUDGMENT OF THE HON'BLE
MADRAS HIGH COURT IN WP(MD) 2127/2021
(M/S.D.Y. BEATHEL ENTERPRISES VERSUS THE
STATE TAX OFFICER (DATA CELL),
(INVESTIGATION WING) COMMERCIAL TAX
BUILDINGS, TIRUNEVELI).
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APPENDIX OF WP(C) 27854/2022

PETITIONER EXHIBITS
EXHIBIT P1 COPY OF FORM GSTR 3B DATED 07-02-2020
FILED BY THE PETITIONER FOR THE MONTH
DECEMBER, 2018
EXHIBIT P1(A) COPY OF FORM GSTR 3B DATED 07-02-2020
FILED BY THE PETITIONER FOR THE MONTH
JANUARY, 2019
EXHIBIT P1(B) COPY OF FORM GSTR 3B DATED 07-02-2020
FILED BY THE PETITIONER FOR THE MONTH
FEBRUARY, 2019
EXHIBIT P1(C) COPY OF FORM GSTR 3B DATED 28-02-2020
FILED BY THE PETITIONER FOR THE MONTH
MARCH, 2019
EXHIBIT P2 COPY OF THE NOTIFICATION NO. 52/2020-
CENTRAL TAX DATED 24-06-2020 ISSUED BY
THE 2ND RESPONDENT
EXHIBIT P3 COPY OF THE NOTIFICATION NO. 19/2021-
CENTRAL TAX DATED 01-06-2021 ISSUED BY
THE 2ND RESPONDENT
EXHIBIT P4 COPY OF THE NOTIFICATION NO. 33/2021-
CENTRAL TAX DATED 29-08-2021 ISSUED BY
THE 2ND RESPONDENT
EXHIBIT P5 COPY OF NOTICE IN FORM DRC-01A DATED 19-
07-2022 ISSUED BY THE 1ST RESPONDENT
EXHIBIT P6 COPY OF THE INTERIM ORDER IN WP(C) NO.
10824/2022 DATED 29-03-2022 PASSED BY THE
HON'BLE HIGH COURT OF KERALA
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APPENDIX OF WP(C) 24327/2022

PETITIONER EXHIBITS
EXHIBIT- P1 TRUE COPY OF THE NOTICE FORM GST ASMT-10
DATED 29/6/2020 ISSUED U/S 61 OF THE
ACT,2017 BY THE 4TH RESPONDENT
EXHIBI - P2 TRUE COPY OF THE SHOW CAUSE NOTICE
32AACFJ5865CDIZN/2017-18 DATED 28/6/2021
IN GST DRC -01 ISSUED BY THE 4TH
RESPONDENT
EXHIBIT- P3 TRUE COPY OF THE REPLY DATED 27/11/2021
SUBMITTED BY THE PETITIONER THROUGH THE
ONLINE PORTAL
EXHIBIT- P4 TRUE COPY OF THE ORDER U/S/ 73 DATED
1/6/2022 ALONG WITH FORM GST DRC -07
ISSUED BY THE 4TH RESPONDENT
EXHIBIT -P5 TRUE COPY OF THE CIRCULAR BEARING NO.
123/42/2019- GST DATED 11/11/2019 ISSUED
BY THE MINISTRY OF FINANCE, GOVERNMENT OF
INDIA
EXHIBIT- P6 TRUE COPY OF CIRCULAR NO. 122/41/2019-GST
DATED 5/11/2019 ISSUED BY THE CENTRAL
BOARD OF DIRECT TAXES AND CUSTOMS.
EXHIBIT-P7 TRUE COPY THE CIRCULAR NO. 8/2020 DATED
4/8/2020 ISSUED BY COMMISSIONER OF STATE
TAX
EXHIBIT -P8 TRUE COPY OF THE JUDGMENT OF THE
HONOURABLE MADRAS HIGH COURT IN W.P.(MD)
2127/2019 (M/S D. Y. BEATHEL ENTERPRISES
VERSUS THE STATE TAX OFFICER , ( DATA
CELL), (INVESTIGATION WING) COMMERCIAL
TAX BUILDING,TIRUNELVELI). DATED
24/2/2021
EXHIBIT -P9 TRUE COPY OF THE PRESS RELEASE DATED
4/5/2018 ISSUED BY THE CBIC
EXHIBIT- P10 TRUE COPY OF THE PRESS RELEASE DATED
18/10/ 2018 ISSUED BY THE CBIC
EXHIBIT- P11 TRUE COPY OF THE INTERIM ORDER IN W.P.C.
NO. 15802/2022 OF THE HONOURABLE HIGH
COURT OF KERALA DATED 13/5/2022
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APPENDIX OF WP(C) 36612/2022

PETITIONER EXHIBITS
EXHIBIT P1 TRUE COPY OF THE ORDER DT.31.12.2021
ISSUED BY 1ST RESPONDENT ,FINANCIAL YEAR
2017-2018 .REF.NO. Z13212210069351
EXHIBIT P2 TRUE COPY OF THE APPELLATE ORDER
DT.29.06.2022 OF THE 2ND RESPONDENT IN
APPEAL NO.GST(ALPY) 66/2022.
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97

APPENDIX OF WP(C) 24677/2023

PETITIONER EXHIBITS
EXHIBIT 1 TRUE COPY OF THE RECOVERY NOTICE BEARING
NO.AR/GST/ 32AKPPS5038M1ZL/27/2023-24
DATED 16.6.2023 ISSUED BY THE 2ND
RESPONDENT.
EXHIBIT-P2 TRUE COPY OF THE RECOVERY NOTICE BEARING
NO.AR/GST/ 32AKPPS5038M1ZL/28/2023-24
DATED 16.6.2023 ISSUED BY THE 2ND
RESPONDENT.
EXHIBIT-P3 TRUE COPY OF THE ASSESSMENT ORDER
NO.32AKPPS5038M1ZL/2017-18/2022-23 DATED
4.11.2022 ALONG WITH FORM GST DRC 07
DATED 4.11.2022 UPLOADED IN THE GST
PORTAL ISSUED BY THE 1ST RESPONDENT.
EXHIBIT-P4 TRUE COPY OF THE ASSESSMENT ORDER
NO.32AKPPS5038M1ZL/2018-19/2022-23 DATED
4.11.2022 ALONG WITH FORM GST DRC 07
DATED 4.11.2022 UPLOADED IN THE GST
PORTAL ISSUED BY THE 1ST RESPONDENT.
EXHIBIT-P5 TRUE COPY OF THE ASSESSMENT ORDER
NO.32AKPPS5038M1ZL/2019-20/2022-23 DATED
4.11.2022 ALONG WITH FORM GST DRC 07
DATED 4.11.2022 UPLOADED IN THE GST
PORTAL ISSUED BY THE 1ST RESPONDENT.
EXHIBIT-P6 TRUE COPY OF ORDER DATED 10.11.2022 IN
W.P.(C) 24243/2022 PASSED BY THIS HON'BLE
COURT.
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APPENDIX OF WP(C) 37039/2023

PETITIONER EXHIBITS
EXHIBIT P1 TRUE COPY OF THE SHOW CAUSE NOTICE DATED
13/03/2023 IN DRC 01A
EXHIBIT P2 TRUE COPY OF THE REPLY DATED 18.5.2023
EXHIBIT P3 TRUE COPY OF THE SHOW CAUSE NOTICE DATED
07/08/2023
EXHIBIT P4 TRUE COPY OF THE REPLY DATED 4/09/2023
EXHIBIT P5 THE COPIES OF THE INVOICES ( TAX
INVOICES) OF THE SUPPLIER DULY CHARGING
GST ON THE RENTAL AMOUNTS
EXHIBIT P6 TRUE COPY OF THE STATEMENT SHOWING
DETAILS OF PAYMENTS MADE TO THE SUPPLIER
EXHIBIT P7 TRUE COPY OF THE BANK STATEMENT
EVIDENCING THE PAYMENTS MADE TO THE
SUPPLIER DATED:13/09/2023