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Reversal of ITC─Late filing of Return─Applicability of section 16(4) CGST Act, 2017 |
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Reversal of ITC─Late filing of Return─Applicability of section 16(4) CGST Act, 2017 |
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Section 16(2)(d) , CGST Act, 2017 starts with notwithstanding clause and stipulates “furnishing of return u/s 39 for entitlement of ITC”. This clause nowhere mentions “timely submission of returns and/or debarring rectification of any return belatedly, for being entitled to avail ITC. The “notwithstanding clause”, in the section 16(2) means that it supersedes[1] all the sub-sections of section 16. As such, in our view, if a registered person has furnished returns &/or rectified any return belatedly, he is entitled to ITC irrespective of section 16(4) CGST Act, 2017 and his vested right[2] can not be withdrawn in the absence of a clear legal prohibition, by framing rules. Rules are procedural in nature and can not be construed as a mandatory provisions[3]. The Govt. has no legal authority to retain the amount of credit to which the respondent in the present case is entitled to and retention of it by the Govt., cannot be sustained, being violative of Article 265 of the Constitution of India[4]. In view of the above, in our view, ITC is not required to be reversed.
CA Om Prakash Jain Jaipur 9414300730 [1]. ASSISTANT COMMERCIAL TAXES OFFICER, BHILWARA VERSUS LAXMI MISTHAN BHANDAR [1988 (4) TMI 418 - RAJASTHAN HIGH COURT]
By: OmPrakash jain - April 9, 2020
Discussions to this article
Dear Sh.Jain Ji, Your article is too brief to be understood. It is incomplete without suggestion of remedy.Your interpretation will be complete only if you suggest the remedy i.e. how to reply to the notices received by the tax payers for denial of ITC invoking Section 16(4). Simply saying violative of Article 265 would not suffice. Pl. elaborate as part-II in continuation of this article clarifying how the case laws cited by you are applicable. Thanks a lot for writing on the burning topic. K.L.SETHI
Sh. KASTURI SETHI, I have written my article legally analyzing section 16, GST Act, 2017 based on the ratio decidendi of various judicial pronouncements. My main emphasis is on Section 16(2), CGST Act, 2017 which starts with notwithstanding clause meaning thereby that it supersedes sub-section 4 of section 16, based on the following cases; a). A.C.T.O. v. Laxmi Misthan Bhandar (Raj) = 1988 (4) TMI 418 - RAJASTHAN HIGH COURT b). Central Bank of India v. State of Kerala 2009 (2) TMI 451 - SUPREME COURT c). Synergy Fertichem Pvt. Ltd. v. State of Gujarat & Ors (Guj) = 2019 (12) TMI 1213 - GUJARAT HIGH COURT d). Madhav Rao Jivaji Rao Scindia v. Union of India and another 1970 (12) TMI 87 - SUPREME COURT ITC is a vested property right under Article 300A, Constitution of India per recent judgment in Union of India & Ors. v. Adfert Technologies Pvt. Ltd. 2020 (3) TMI 188 - SC ORDER. Previously also, ITC/CNVAT Credit was held to be a vested right, which can not be allowed to be lapsed vide case laws─1999 (1) TMI 34 - SUPREME COURT Eicher Motors Ltd. v. Union of Ind (SC), Siddharth Enterprises v. The Nodal Officer & Ors. (Guj) = 2019 (9) TMI 319 - GUJARAT HIGH COURT* * The review petition filed by the Govt. has been dismissed by the court (2020) 33 J.K.Jain’s GST & VR 160 Nodal Officer & Ors. v. Siddharth Enterprises (Guj) Inspite of this clear intent of legislature, the Govt. has issued large No. of notices based on S.16(4), by adopting Revenue oriented approach, illegally. It will increase litigations and harassment of general public against the Budget speech (2020-21) of Hon’ble Finance Minister. You might be aware that on 6.12.2019, the Govt. has filed SLP in the Supreme court : Union of India & Ors. v. AAP And Co. (SC) 2019 (12) TMI 706 - SC ORDER against Gujarat High court decision dated 24.6.2019─AAP and Co. v. Union of India & Ors. (Guj) = 2019 (7) TMI 401 - GUJARAT HIGH COURT, which is still pending. I have given my detailed legal analysis based on clear intent of legislature over the pending case in Supreme court. The Gujarat High court in the case of Jakap Metind Pvt. Ltd. v. Union of India & Ors. 2019 (11) TMI 710 - GUJARAT HIGH COURT, has held that the Govt. has no legal authority to retain the amount of credit to which the respondent is entitled to and retention of it by the Govt., cannot be sustained, being violative of Article 265 of the Constitution of India. Over and above the Revenue oriented approach of the Govt. would tentamounts to Double taxation and would be against the basic principles of GST, viz., to mitigate cascading effect of taxation. In case of any more clarification/query, please write to me.
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