Pazhassi Motors Vs State of Kerala (Kerala High Court)
The Kerala High Court (Kerala High Court) considered a writ petition filed by a registered taxpayer under the CGST/KGST Act, 2017, challenging an assessment order for the year 2018–19. Under the impugned order, the input tax credit (ITC) claimed by the petitioner was denied on the ground that returns for the period from May 2018 to March 2019 were not filed within the time limit prescribed under Section 16(4) of the CGST Act.
The petitioner contended that the denial was unsustainable in view of Section 16(5) of the CGST Act, which was introduced subsequently. According to the petitioner, Section 16(5) entitles a taxpayer to avail ITC if the relevant returns are filed before the cut-off date specified therein, namely 30 November 2021. It was argued that the petitioner had filed the returns within this cut-off period and was therefore eligible for ITC.
The State opposed the petition by pointing out that the petitioner had earlier filed a writ petition challenging the constitutional validity of Section 16(4) of the CGST Act. That challenge had been rejected by a common judgment dated 04.06.2024. On this basis, it was argued that the petitioner could not seek relief without first seeking modification or review of the earlier judgment.
The Court, however, rejected this objection. It held that the present claim was based on a statutory provision—Section 16(5)—which was introduced later and specifically begins with a “notwithstanding” clause overriding Section 16(4). The Court noted that Section 16(5) imposes no condition other than filing returns before the specified cut-off date. Once that condition is satisfied, the time limit under Section 16(4) loses relevance. As this later provision created a fresh statutory right, it constituted a new cause of action independent of the earlier challenge to Section 16(4).
Accordingly, the Court held that the petitioner was entitled to the benefit of Section 16(5). The assessment order denying ITC was quashed, and the matter was remitted to the assessing authority with a direction to reconsider the claim after granting an opportunity of hearing. The authority was directed to grant the benefit of Section 16(5) if the petitioner was otherwise eligible.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
The petitioner is a registered tax payer under the provisions of the CGST/KGST Act, 2017. The grievance of the petitioner is against Ext.P1 order of assessment pertaining to the year 2018-19, in which the input tax credit claimed by the petitioner was declined. The reason for rejecting the claim was that the petitioner failed to submit the returns pertaining to the months of May 2018 – March 2019 within the period stipulated under Section 16(4) of the CGST Act. The case of the petitioner is that, in view of Section 16(5), which was subsequently introduced in the CGST Act, the petitioner is entitled to get the input tax credit, in view of the fact that the petitioner had submitted the returns pertaining to the relevant period before the cut off date contemplated under Section 16(5) of the Act. It was in these circumstances that this writ petition was submitted.
2. I have heard Sri. Jaikrishna, the learned counsel for the petitioner, and Smt. Reshmitha R. Chandran, the learned Government Pleader for the respondents.
3. The learned Government Pleader pointed out that even going by the pleadings, the petitioner had earlier submitted a writ petition, which was numbered as W.P.(C.) No.31219/2022, before this Court challenging the constitutional validity of Section 16(4) of the CGST Act, and as per the common judgment dated 04.06.2024, this Court rejected the said contention, and the writ petitions were dismissed. Therefore, it was pointed out that the petitioner cannot claim the relief in this writ petition without seeking the modification in the said judgment either by challenging or seeking review of the same.
4. However, after considering all relevant aspects, I am not inclined to accept the said contention. This is particularly because, the claim now raised by the petitioner is based on a statutory provision that was introduced later, and it specifically provides for input tax credit, subject to the condition that the returns are filed before the 30th day of November, 2021. Apart from the fact that the returns are to be filed within the said cut off date, no other conditions are imposed in Section 16(5), and it is also a relevant aspect to notice that Section 16(5) starts with the wording “notwithstanding anything contained in Subsection 4.” This would indicate that, once the tax payer submits the return within the period stipulated in Section 16(5), the time limit contemplated under Section 16(4) of the CGST loses its significance. Therefore, this being a separate statutory provision subsequently introduced, it amounts to a fresh cause of action for the petitioner to claim the relief sought in this writ petition. Therefore, I find that, the fact that the petitioner had earlier approached this Court challenging Section 16(4) of the CGST Act and got an adverse order, cannot be a reason not to entertain this writ petition.
In such circumstances the petitioner is entitled to the benefit of Section 16(5), and hence an interference is required. Accordingly, this writ petition disposed of quashing Ext. P1, with a direction to the 2nd respondent to reconsider the matter and pass fresh orders, by giving the petitioner an opportunity to be heard. While passing the said order, the benefit of Section 16(5) shall be granted to the petitioner, if the petitioner is otherwise entitled to the same.
