Calcutta High Court: In an intra-court appeal revolving r around the denial of Input Tax Credit (ITC) due to late filing under Section 16(4) of the West Bengal Goods and Services Tax Act, 2017 (GST Act), a division bench comprising of T.S. Sivagnanam,* CJ., and Hiranmay Bhattacharyya, J., ruled against the appellant, affirming the denial of ITC and upheld the penalty for willful misrepresentation. The Court upheld the constitutional validity of Section 16(4) of the GST Act, emphasising the importance of legislative intent in economic regulation matters.
Factual Matrix
In the instant matter, the dispute arose from the denial of ITC of Rs. 28,65,780/- for the period from November 2018 to March 2019. The denial was based on the appellant’s filing of returns beyond the statutory time limit specified in Section 16(4) of the GST Act, which expired on 20.10.2019. The appellant received a show-cause notice on 28-10-2020, questioning the eligibility for ITC. The appellant sought an extension of time on 25-11-2020, but on 04-01-2021, respondent 2 ordered the appellant to pay tax, penalty, and interest. The appellant did not comply, and the department debited the amount on 11-09-2021.
The appellant appealed to the statutory appellate authority, but on 07-05-2022, was informed about the non-deposit of the pre-deposit amount. The appellant claimed that recovery proceedings were initiated, resulting in debits from their ledgers. The appellant’s appeal before the statutory appellate authority was unsuccessful, and the order was confirmed on 04-01-2023, stating that the appellant, by availing ITC beyond the time limit, was not entitled to it.
The petitioner-appellant preferred a writ petition challenging an order-in-appeal dated 04-01-2023, seeking direction for the respondent to refund Rs. 28,63,680/-, allegedly recovered in excess of 10% of the disputed tax amount. The order was issued under Section 107 of the Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017. The Single Bench of this Court vide order dated 13-06-2023 held that there is no scope for passing interim orders, and the writ petition required an affidavit from the respondent for final adjudication. Aggrieved by the order of Single Bench of this Court, the appellant preferred the present intra-court appeal against the same.
Moot Point
The central issue revolved around the denial of ITC due to late filing under Section 16(4) of the GST Act.
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Whether the denial of ITC was justified based on the appellant’s late filing of returns?
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Whether the statutory time limit under Section 16(4) of the GST Act overrides the entitlement provision in Section 16(2)?
Parties’ Contentions
The appellant argued that ITC is not claimed through returns but through the books of account, contending that Section 16(2) of the GST Act should override Section 16(4). The appellant referred to 18th GST Council meeting and Union of India v. Bharti Airtel Ltd., and relevant notifications. On the other hand, the respondents argued that the non-obstante clause in Section 16(2) does not limit the operation of Section 16(3) or Section 16(4) and that they complement each other, restricting the provisions and limiting the scope of Section 16(4). The respondent asserted that the imposition of penalty is justified due to willful misstatement and fraud by the appellant.
Legal Analysis and Decision
The Court rejected the appellant’s arguments that that ITC is not claimed through returns but through books of account, emphasising that the conditions in Section 16(2) are mandatory and must be strictly construed. The Court stressed the importance of strict compliance with conditions when claiming concessions under taxation statutes.
The court rejected the appellant’s contention that Section 16(2) overrides Section 16(4) and affirmed that both provisions complement each other. The Court stated that non-obstante clauses should be interpreted in harmony with other provisions, and the purpose of such clauses must be ascertained.
The Court relied on ALD Automotive (P) Ltd. v. CTO, (2019) 13 SCC 225 and TVS Motor Co. Ltd. v. State of T.N., (2019) 13 SCC 403, and held that ITC is a concession provided by the statute, subject to strict compliance with conditions.
The Court reaffirmed the principle that statutory conditions for availing benefits or concessions, such as Input Tax Credit, must be strictly adhered to, and non-compliance can lead to the denial of such benefits. The Court held that the appellant failed to comply with the statutory time limit, rendering them ineligible for ITC.
Court’s Decision
The Court ruled against the appellant, confirming the denial of Input Tax Credit and upheld the constitutional validity of Section 16(4) of the GST Act. The Court dismissed the appeal and writ petition and affirmed the orders of the authorities. No costs were awarded.
[BBA Infrastructure Ltd. v. Senior Joint Commissioner of State Tax, 2023 SCC OnLine Cal 4976, order dated 13-12-2023]
*Judgment by Chief Justice T.S. Sivagnanam
Advocates who appeared in this case :
Mr. Vinay Shraff, Ms. Priya Sarah Paul, Counsel for the Appellant
Mr. T.M. Siddiqui, Ld. Additional Government Pleader, Mr. T. Chakraborty, Mr. S. Sanyal, Counsel for the State
