9911796707
TMI Blog2025 (2) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... nic Acid, Caustic Soda Flaxes, Soda Ash, DGlucitol (Sorbitol), Phosphoric Acid, Acetic Acid situated at 165-B, Sector- E, Sanwer Road, Indore. The CGST and Central Excise, Indore Commissionerate received information that the petitioner and 11 others had availed fraudulent Input Tax Credit (ITC) on the invoices issued by respondent No.3 for the Financial Year 2019-20 and 2020-21. So far as the petitioner is concerned, an amount of Rs. 27,22,284/- was availed as ITC during the aforesaid two financial years. In the enquiry it was also revealed that the business of petitioner is in sale and purchase of Industrial Chemical whereas respondent No.3 is the supplier of FMCG Goods. A summon was issued and subsequently inspection was carried out in the business premises of the petitioner on 20.10.2023. Petitioner has submitted a detailed representation on 01.11.2023 and 23.11.2023. Now, the impugned showcause notice 31.12.2024 has been issued to the petitioner and 11 others who availed the ITC. Respondent No. 3 has also been served with a show-cause notice as to why penalty should not be imposed under Sections 122(1)(ii) along with 122(1)(x), (xii), (xvi) and (xvii) read with Sections 127 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of fake invoices to various manufacturers without actual supply of goods. The investigation further revealed that the noticees had shown supply of various commodities to their recipients despite the fact that their supply pertains to FMCG goods. A detailed show-cause notice which runs into 82 pages has been issued to the petitioner and 11 other purchasers as well as respondent No. 3/supplier. Therefore, only on the instance of the petitioner the entire show-cause notice cannot be quashed. Petitioner is required to establish its defence by producing documents before the competent authority, who shall examine the invoices and bills generated by all the noticees during the enquiry. It appears that in order to avoid the participation in the enquiry, petitioner is challenging the constitutional validity by placing reliance on the judgment passed by the Delhi High Court in case of On Quest Merchandising India Pvt. (supra) in respect of Delhi Value Added Tax Act, 2004 in which the pari materia provision was 'read down'. But the High Court of Judicature at Patna and High Court of Kerala have considered the validity of Section 16(2)(c) and upheld the same. 7. The operative par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a non obstante clause and clearly states that no registered person shall be entitled to the credit of input tax in respect of any supply of goods or services or both unless he fulfills the requirements and satisfies the existence of other conditions prescribed in Clauses (a) to (d) thereof. 24. Sub-section (3) of Section 16 contemplates yet another circumstance when ITC on tax component cannot be allowed, i.e., where the registered person has claimed depreciation on the tax component of cost of capital goods and plant and machinery under the provisions of the Income Tax Act, 1961. 25. Lastly comes the offending clause which is under challenge i.e. sub-section (4) of Section 16 of the CGST/BGST Act, which, in no unambiguous terms, provides that a registered person shall not be entitled to take ITC in respect of any invoice or debit note for supply of goods or services or both after 30th day of November (post amendment), following the end of financial year to which such invoices or debit note pertain or furnishing of the relevant annual return, whichever is earlier. The language of Section 16 of the CGST/BGST Act suffers from no ambiguity and clearly stipulates grant of ITC su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the party can have. The term property has a most extensive signification, and, according to its legal definition, consists in free use, enjoyment, and disposition by a person of all his acquisitions, without any control or diminution, save only by the laws of the land. In Dwarkadas Shrinivas case [1950 SCC 833 : 1950 SCR 869 : AIR 1951 SC 41] this Court gave extended meaning to the word property. Mines, minerals and quarries are property attracting Article 300-A. 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 val ..... X X X X Extracts X X X X X X X X Extracts X X X X
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