Plea challenging Section 16(4) of the CGST Act for denying ITC if not claimed within due date of Furnishing of Return: Calcutta HC issues notice [Read Order]

The Calcutta High Court has issued notice to the Centre and State Government on the plea challenging the constitutional validity and vires of Section 16(4) of the CGST Act, 2017 and of West Bengal Goods and Service Tax Act, 2017.

The validity is challenged to the extent that it seeks to deny Input Tax Credit (ITC) if it is not taken within the due date of furnishing of the return for the month of September following the end of the financial year to which any invoice or debit note pertains or furnishing of annual return, whichever is earlier.

The petition alternatively prayed for declaration of the conditions as prescribed in Section 16(4) of the Act as merely procedural in nature which cannot override substantive conditions as mandated under Section 16(1) and Section 16(2) of the Act.

The petition further challenged the constitutional validity of the retrospective amendment of Rule 61 of the CGST Rules, 2017 or WBGST Rules, 2017.

Further petition is also praying for declaration of return required to be furnished in Form GSTR- 3B as an incomplete, non-est, and invalid return in the eye of law.

The matter is being argued by Advocate Vinay Shraff with Advocate Himangshu Kumar Ray on the ground that if the restriction under Section 16(4) of the Act is invoked and ITC is denied then the ‘non-obstante clause’ in Section 16(2) of the Act would cease to have any meaning or purpose and would be rendered otiose.

It is being further argued that ITC is not taken through return but instead it is taken through the books of accounts immediately on receipt of goods or services in terms of 1 st proviso to Section 16(2) of the Act. It is also being argued that the provision of section 16(4) of the CGST Act,2017/WBGST Act, 2017 is arbitrary and unreasonable as they are violative of Article

It was further pleaded that they are also violative of Article 19(1)(g) and Article 300A of the Constitution. The denial of ITC would defeat the object of the 122 nd Constitutional Amendment Bill, 2017, that is to avoid the cascading effect of taxes.