The Gujarat High Court has in the writ filed by Surat Mercantile Association has issued notices to the Government on a plea challenging validity of Section 16(4) of the CGST Act, 2017 which mandates the time limit for availing of input tax credit (ITC).
The appellant, Surat Mercantile Association challenged the constitutional validity of Section 16(4) of the GST Act, 2017 on the ground of being manifestly arbitrary and violative of Articles 14, 19(1)(g) and 300A respectively of the Constitution.
The argument canvassed by the appellant is that the taxpayers cannot be made to suffer by not allowing the ITC on account of the failure on the part of the respondents to notify the Forms GSTR-2 and GSTR-3 respectively.
It was also argued that the retrospective amendment in Rule 61(5) of the CGST Rules and deletion of Rule 61(6) is unconstitutional being violative of Article 279A of the Constitution.
It was argued that if there is a delay in filing of the returns in the Form GSTR-3B from the due date of furnishing of the returns for the month of September following the end of the financial year or furnishing of the relevant annual returns, whichever is earlier, would render the Input Tax Credit time-barred, be quashed and set aside.
The appellant further submitted that appropriate directions may be issued declaring that Section 39 of the Act does not bar filing of the returns without payment of tax and the GSTN portal not allowing furnishing of such returns without payment of tax be declared as arbitrary and unreasonable being violative of Article 14 of the Constitution of India.
Considering the submissions of the appellant, the division bench of Justice J.B.Pardiwala and Ilesh J. Vora directed the service of notice on the respondents, which is returnable on 25th March 2021.
Statutory provisions:
Time limit for availing of ITC is prescribed under Section 16(4)
Section 16(4) of the CGST Act, 2017 mandates the time limit for availing of Input Tax Credit and the provision is reproduced below:
(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.
Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.
Filing of GSTR-3B (Rule 61(5))
(5) Where the time limit for furnishing of details in FORM GSTR-1 under section 37 or in FORM GSTR-2 under section 38 has been extended, the return specified in subsection (1) of section 39 shall, in such manner and subject to such conditions as the Commissioner may, by notification, specify, be furnished in FORM GSTR-3B electronically through the common portal, either directly or through a Facilitation Centre notified by the Commissioner:
Provided that where a return in FORM GSTR-3B is required to be furnished by a person referred to in sub-rule (1) then such person shall not be required to furnish the return in FORM GSTR-3.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
