Case Law Details
Manappuram Finance Ltd. Vs Union of India & Ors. (Bombay High Court)
Bombay High Court Sets Aside Demand on ISD for Delayed Distribution of ITC under Rule 39(1)(a) of CGST Rules
The Petitioner is a registered taxpayer. It is engaged in financing. It has head office registered as Input Service Distributor (ISD) at Mumbai. A notice was issued alleging that the ISD has not distributed the credit in the same month in terms of Rule 39(1)(a) of the CGST Rules. Demand was confirmed. The same was challenged in Writ Petition. The validity of Rule 39(1)(a) was also challenged on the ground that the same is ultra vires Section 20 of the Act.
The Hon’ble Bombay High Court set aside the order and allowed the petition. It held: (i) similar issue has been decided by the Hon’ble Madras High Court in the case of Reliance Jio Infocomm Ltd. wherein it was held that no lapsing provision; (ii) The Hon’ble Telangana High Court in the case of Birlanu Ltd. held the Rule to be ultra vires; (iii) accordingly; remands the matter back to the Adjudicating Authority to reconsider/revisit the issues; (iv) keeps the challenge to Rule 39(1)(a) open to be considered in appropriate proceedings.
Argued by Adv. Bharat Raichandani a/w Adv. Mahesh Raichandani i/b UBR Legal.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. The Writ Petition is filed under Article 226 of the Constitution of India challenging the vires and validity of Rule 39(1)(a) of the CGST Rules, 2017. The Petitioner has also assailed the order dated 29th April 2024 (Exhibit D) passed by the State Tax Officer, (Vashi-Turbhe-702), Raigad Division, Navi Mumbai.
2. Mr Raichandani, for the Petitioner would submit that the Petitioner was not given a personal hearing before the order was passed. Mr Deolkear, learned AGP for the Respondent refutes the submission by contending that hearing was given as disclosed in the said order. Be that as it may.
3. Mr Riaichandani has relied upon two decisions, one being Reliance Jio Infocomm Ltd. Vs Union of India [(2026) 40 Centax88 (Mad.)] and the other being Birlanu Ltd. Vs Union of India [(2026) 38 Centax 172 (Telangana)]. It is submitted at the Bar that the issue raised in the Petition would be covered by the aforementioned decisions.
4. In view of the above, it would be in the interest of justice to remand the proceedings to the said authority, i.e., the State Tax Officer, (Vashi-Turbhe-702), Raigad Division, Navi Mumbai, who had passed the impugned order. The said authority shall reconsider/re-visit the issues raised in the Petition, more particularly, in light of the decisions (Supra) and pass a reasoned order, afresh, on merits and in accordance with law. Accordingly, the Impugned Order dated 29th April 2024 (Exh.D) is hereby quashed and set aside.
5. We make it clear that all contentions of the parties are expressly kept open to be urged before the said Authority. We have not expressed any opinion on the merits of the rival contentions.
6. With the above observations, the Writ Petition stands disposed of.
7. It is clarified that the challenge to the validity of the said Rule 39(1)(a) of the CGST Rules, 2017 is kept open to be decided at an appropriate stage/proceeding, when the occasion so arises.
8. All concerned to act on an authenticated copy of the order.
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