Hon’ble Patna High Court in case of M/s Gobinda Construction Vs Union of India through the Secretary Date of Judgement: 08-09-2023 held that sub-section (4) of Section 16 of the CGST/ BGST Act are constitutionally valid and are not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India.
The relevant portion of the judgement is as under:
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 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.
31. Fiscal legislation having uniform application to all registered persons, in our considered opinion, cannot be said to be violative of Article 19(1)(g) of the Constitution and the question of such statutory provision being violative of Article 302 of the Constitution and in teeth of Article 13 of the Constitution of India does not arise at all.
32. Mr. P. K. Shahi, learned Advocate General appearing on behalf of the State, has rightly referred to the Supreme Court’s decision in case of ALD Automotive Private Limited (supra), wherein the Supreme Court had the occasion to deal with a challenge to the constitutional validity of Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006. Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006 reads as under :- “19. (11) In case any registered dealer fails to claim input tax credit in respect of any transaction of taxable purchase in any month, he shall make the claim before the end of the financial year or before ninety days from the date of purchase, whichever is later.”
33. Referring to the Supreme Court’s decision in case of Godrej & Boyce Mfg. Co. Pvt. Ltd. & Ors. vs. Commissioner of Sales Tax & Ors. reported in (1992) 3 SCC 624 the Supreme Court in case of ALD Automotive Private Limited (supra) has held that the ITC is in the nature of benefit/ concession extended to a dealer under the statutory scheme and the concession can be received by the beneficiary only as per the scheme of the statute.
34. In case of Jayam and Company vs. Assistant Commissioner & Anr. reported in (2016) 15 SCC 125 the Supreme Court had to consider the validity of Section 19(10) of the Tamil Nadu Value Added Tax Act, 2006. After having analysed the legal principles and the statutory provisions the Supreme Court, while upholding the constitutional validity of Section 19(20) of the Tamil Nadu Value Added Tax Act, 2006, held in paragraph 12 as under :- “12. It is a 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 in view the scope of the issue, such a plea is not admissible having regard to the plain language of sections of the VAT Act, read along with other provisions of the said Act as referred to above.”
35. Relying on the said decision, in case of Jayam and Company (supra), the Supreme Court in case of ALD Automotive Private Limited (supra) upheld the constitutional validity of Section 19(11) of Tamil Nadu Value Added Tax Act, 2006 with a clear finding that the said provision neither can be said to be arbitrary nor violative of the right guaranteed to a dealer under Article 19(1)(g) of the Constitution.
36. Submission has been made, though feebly, on behalf of the petitioners that this Court may declare the requirement of sub-section (4) of Section 16 as directory and not mandatory. The said submission is not at all tenable in view of the clear language used in Section 16 of the Act. The concession of ITC under sub-section (1) of Section 16 of the CGST/ BGST Act is dependent upon the fulfillment of requisite conditions laid down under various provisions including sub-section (4) thereof.
37. For the reasons noted above, we are of the considered opinion that sub-section (4) of Section 16 of the CGST/ BGST Act are constitutionally valid and are not violative of Articles 19(1)(g) and Article 300-A of the Constitution of India. The said provision is not inconsistent with or in derogation of any of the fundamental right guaranteed under the Constitution of India. 38. We accordingly do not find any merit in these writ applications, which are accordingly dismissed.
