Facts of the Case

This batch of writ petitions before the Patna High Court, led by the case of Gobinda Construction (Civil Writ Jurisdiction Case No. 9108 of 2021) and clubbed with several connected writ petitions (including CWJC Nos. 2854, 4694, 5636 and 5747 of 2021, among others), raised a common constitutional challenge to Section 16(4) of the CGST/BGST Act, 2017. The petitioners were registered persons under the CGST/BGST Act who had filed their GSTR-3B returns for tax periods in Financial Year 2018-19 belatedly. In the representative case, Gobinda Construction had filed its GSTR-3B returns for February and March 2019 on 23.10.2019 and 07.11.2019 respectively — after the statutory cut-off. The Assistant Commissioner of State Tax, Patna Central, issued a show cause notice dated 20.02.2020 under Section 73 of the BGST Act proposing to disallow Input Tax Credit (ITC) availed for these periods on account of the delayed filing, quantifying tax, interest and penalty at Rs. 1,34,12,983/-. After the petitioner's reply was rejected, an order under Section 73 confirmed the demand, and a subsequent appeal before the Additional Commissioner of State Tax (Appeal) was dismissed on 06.02.2021, holding the ITC inadmissible under Section 16(4).

Rather than confining the challenge to the individual assessment orders, the petitioners across all the connected writ petitions questioned the constitutional validity of Section 16(4) of the CGST/BGST Act itself — the provision that bars a registered person from availing ITC on an invoice or debit note after the due date for filing the return under Section 39 for the month of September following the end of the relevant financial year (later amended to 30th November by the Finance Act, 2022, with effect from 01.10.2022). Some petitioners also separately challenged Rule 61(5) of the CGST Rules, 2017 as ultra vires Section 39(1) of the Act. Since all the petitions involved the identical core question of the validity of Section 16(4), the Division Bench heard and disposed of them together by a common judgment.

Issues Involved

  1. Whether Input Tax Credit (ITC) under the CGST/BGST Act is a vested or constitutionally protected right, such that its denial under Section 16(4) for belated return filing amounts to deprivation of property in violation of Article 300A of the Constitution.
  2. Whether Section 16(4) imposes an unreasonable and disproportionate restriction on the right to carry on trade or business under Article 19(1)(g), rendering it violative of Article 302 and Article 13 of the Constitution.
  3. Whether Section 16(4) should be read down or treated as merely directory (rather than mandatory) so as to permit ITC claims beyond the prescribed cut-off date.

Petitioner's Arguments

  • Refusal to allow ITC under Section 16(4) beyond the stipulated date is confiscatory in nature and ITC is a vested right protected under Article 300A of the Constitution, which cannot be taken away merely for belated filing of returns.
  • In the alternative, Section 16(4) should be read down so that the time-bar applies only to invoices or debit notes received after the end of the relevant financial year, and not more broadly.
  • Section 16(4) imposes an unreasonable and disproportionate restriction on the freedom of trade and profession under Article 19(1)(g), without any rational basis for the cut-off date, and is thus violative of Article 302 and inconsistent with Article 13.
  • The provision should be held to be directory rather than mandatory in nature.

Respondent's Arguments

  • ITC is a unique concession under the GST regime, governed by a dedicated statutory scheme (Chapter V, Sections 16 to 21 of the CGST/BGST Act), and Section 16(4) is a substantive condition for availing it, not in conflict with Sections 39, 47 or 49(2).
  • A concession granted by statute can only be availed strictly in accordance with the conditions the statute prescribes; it is not a vested or unconditional right that survives non-compliance with those conditions.
  • Relying on Supreme Court precedent on analogous VAT provisions (including ALD Automotive Private Limited, Jayam and Company, and Godrej & Boyce Mfg. Co.), the State argued that a time-limit for claiming input tax credit is a valid legislative choice and does not offend Articles 14, 19(1)(g) or 300A.
  • Fiscal legislation of uniform application to all registered persons cannot be said to be arbitrary or violative of the right to trade merely because it fixes a cut-off date.

Court Order / Findings

  • The Court held that Section 16(4) of the CGST/BGST Act is one of the conditions that makes a registered person entitled to take ITC, and it is not violative of Article 300A of the Constitution.
  • It declined to read down Section 16(4), finding neither a reason nor a necessity to do so, and reiterated the presumption of constitutional validity attaching to legislation, with the burden on the challenger to displace it.
  • The Court rejected the submission that Section 16(4) unreasonably restricts the right to trade under Article 19(1)(g), holding that fiscal legislation of uniform application to all registered persons cannot be said to violate that right, and that the challenge under Articles 302 and 13 did not arise.
  • Relying on the Supreme Court's reasoning in ALD Automotive Private Limited and Jayam and Company on analogous VAT time-limit provisions, the Court held that ITC is a concession granted under the statutory scheme, to be availed strictly on the conditions specified, and not an unconditional or vested right.
  • The Court also rejected the plea that Section 16(4) be treated as merely directory rather than mandatory, given its clear and unambiguous language.
  • It concluded that Section 16(4) is constitutionally valid and dismissed all the connected writ applications, with no order as to costs.

Important Clarification

This decision confirms that the time-limit for availing Input Tax Credit under Section 16(4) of the CGST/BGST Act is a valid condition attached to a statutory concession, and not an unconstitutional deprivation of property or an unreasonable restraint on trade. Registered persons cannot claim ITC on invoices or debit notes once the statutory cut-off (now the 30th of November following the relevant financial year) has passed, regardless of whether the underlying supply and tax payment were otherwise in order — timely compliance with the return-filing timeline remains a precondition to the credit.

Sections Involved

  • Section 16, Central Goods and Services Tax Act, 2017 — Eligibility and conditions for taking input tax credit
  • Section 39, Central Goods and Services Tax Act, 2017 — Furnishing of returns
  • Section 73, Central Goods and Services Tax Act, 2017 — Determination of tax not paid/short paid
  • Rule 61(5), CGST Rules, 2017 — Form and manner of furnishing return (GSTR-3B)
  • Articles 14, 19(1)(g), 300A and 302, Constitution of India

Decision – In Favour of Department

The Patna High Court ruled in favour of the Revenue, upholding the constitutional validity of Section 16(4) of the CGST/BGST Act and dismissing all the connected writ petitions challenging denial of Input Tax Credit for belated GSTR-3B filings.

Case Details

  • Court: High Court of Judicature at Patna
  • Case No.: Civil Writ Jurisdiction Case No. 9108 of 2021, with connected CWJC Nos. 2854, 4694, 5636, 5747 of 2021 and others
  • Coram: Hon'ble Mr. Justice Chakradhari Sharan Singh and Hon'ble Mr. Justice Madhuresh Prasad
  • Date of Judgment: 08 September 2023 (CAV Date: 15 March 2023)

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