Telangana HC Rejects Vires Challenge to Section 16(2)(c); Permits Delayed GST Appeal

A.S.Traders Vs Deputy Commissioner (Anti Evasion) (Telangana High Court)

Telangana High Court – Section 16(2)(c) Vires Challenge Rejected: M/s. A.S. Traders Granted Liberty to File GST Appeal | W.P. No. 5482 of 2026 Disposed 24.02.2026

Telangana HC Rejects Vires Challenge to Section 16(2)(c); Permits Delayed GST Appeal with Condonation Relief – M/s. A.S. Traders

Introduction

Challenges to Section 16(2)(c) of the GST law—especially in cases involving denial of Input Tax Credit (ITC)—have become increasingly common. Taxpayers often invoke constitutional grounds to contest tax demands when statutory remedies are time-barred or procedurally difficult.

In a recent ruling dated 24.02.2026, the Telangana High Court dealt with one such attempt by M/s. A.S. Traders. The Court declined to entertain the vires challenge and instead directed the petitioner to pursue the appellate remedy, reinforcing that writ jurisdiction cannot be used to bypass statutory timelines.

Case Background

The petitioner challenged:

• Order-in-Original dated 28.08.2024
• Along with a constitutional challenge to Section 16(2)(c) of CGST/SGST Acts

Key aspects:

• The writ petition was filed after a significant delay (about 1.5 years)
• The challenge to vires appeared to be raised primarily to overcome limitation issues
• The petitioner had not pursued the statutory appeal within time

Key Legal Issue

Whether the High Court should:

• Entertain a challenge to the vires of Section 16(2)(c), and
• Allow writ jurisdiction to be used as a substitute for delayed statutory appeal

Arguments Presented

Petitioner’s Submissions:

• Challenged the constitutional validity of Section 16(2)(c)
• Sought permission to file appeal with delay condonation
• Requested sympathetic consideration due to delay

Respondent’s Contentions:

• Petitioner has statutory remedy of appeal available
• Can raise all legal and factual grounds before appellate authority
• Opposed entertaining writ petition in place of appeal

Court’s Observations

The Bench comprising Aparesh Kumar Singh and G. M. Mohiuddin made important observations:

• The vires challenge was raised belatedly, seemingly to revive a time-barred dispute
• The Court was not inclined to entertain constitutional challenge in such circumstances
• Petitioner had adequate alternative remedy
• No necessity to examine merits in writ jurisdiction

 Final Judgment

The writ petition was disposed of with the following directions:

• Relief Denied:
  • Challenge to vires of Section 16(2)(c) rejected
• Liberty Granted:
  • Petitioner allowed to file appeal within 2 weeks
• Conditions:
  • Filing of statutory pre-deposit
  • Submission of delay condonation application
• Direction to Appellate Authority:
  • To consider delay keeping in view that petitioner pursued writ remedy
  • If satisfied, decide appeal on merits

Author’s Analysis – Practical Takeaways for Taxpayers

This judgment offers practical insights for GST litigation:

1. Vires Challenge Cannot Cure Delay
Courts will not entertain constitutional challenges merely to circumvent limitation periods.

2. Writ is Not an Alternative to Appeal
Statutory remedies must be exhausted—writ jurisdiction is not a fallback for delayed action.

3. Courts May Still Provide Relief
Even after delay, courts may grant limited relief by allowing appeal with condonation.

4. Litigation Strategy Matters
Raising constitutional issues without strong basis can weaken credibility before Court.

5. Appeal Route Remains Crucial
Appellate authorities are the primary forum for ITC disputes and factual verification.

Conclusion

The ruling in M/s. A.S. Traders reinforces a consistent judicial stance—procedural discipline in GST matters cannot be bypassed through writ petitions or constitutional challenges. However, the Court balanced this by allowing the taxpayer an opportunity to pursue the appeal with delay condonation.

For taxpayers, the key message is clear: Act within timelines, use appellate remedies effectively, and avoid relying on writ jurisdiction as a substitute for delayed compliance.

FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT

Heard Mr. Mohammed Rafi, learned counsel representing Mr. Shaik Jeelani Basha, learned counsel appearing for the petitioner, Mr. Dominic Fernandes, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs (CBIC) appearing for respondent Nos.1 to 4 and 6 and Ms. M.Bhagyasri, learned counsel representing Mr. N.Bhujanga Rao, learned Deputy Solicitor General of India appearing for respondent No.5.

2. In the instant writ petition, the challenge to the vires of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017, and the State Goods and Services Tax Act, 2017.

3. We are not inclined to entertain the challenge to vires of Section 16(2)(c) of the CGST Act, 2017 and the SGST Act, 2017. The order-in-original was passed on 28.08.2024 and it appears that the petitioner has sought to assail the vires of Section 16(2)(c) of the CGST Act, 2017 and the SGST Act, 2017 only to keep alive the challenge to the order-in-original though it has been passed one and a half years before.

4. In such circumstances, learned counsel for the petitioner seeks and is allowed liberty to the petitioner to prefer an appeal against the impugned OrderIn-Original. He submits that some delay might have been occurred in approaching the appellate authority and therefore, he may be directed to consider it sympathetically.

5. Learned Senior Standing Counsel for CBIC submits that the petitioner is at liberty to prefer an appeal against the Order-In-Original and Summary of the order in FORM GST DRC-07 taking all the grounds as are available in law and on facts before the appellate authority in respect of the subject tax period.

6. Upon hearing the learned counsel for the parties and having regard to the aforesaid facts and circumstances, since the petitioner seeks liberty to prefer an appeal, we do not wish to make any comment on the merits of the contentions raised by the parties.

7. If the petitioner prefers an appeal within a period of two weeks with statutory pre-deposit along with a delay condonation application, the learned appellate authority would consider it in accordance with law by taking into consideration that the petitioner has been pursuing the writ remedy before this Court in the meantime as well. The petitioner will be at liberty to take all the grounds in law and on facts before the appellate authority. If the appellate authority is satisfied that the delay is explained, he would entertain the appeal on merits.

8. Accordingly, the instant Writ Petition is disposed of with the aforesaid liberty. There shall be no order as to costs.

Miscellaneous applications, if any pending, shall stand closed.