Shivneel Gas Sales Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)
Summary: The Karnataka High Court considered a writ petition filed by M/s Shivneel Gas Sales challenging an adjudication order dated 1 December 2023 under Section 73 of the CGST Act, 2017 and the corresponding Karnataka GST law. The dispute concerned the denial of input tax credit (ITC) for the financial year 2017-18 because the petitioner had filed GST returns after the prescribed due dates. The petitioner also challenged the consequential demand summary in Form GST DRC-07, the show cause notice and its summary in Form GST DRC-01. The writ petition additionally questioned the constitutional validity of Section 16(4) and certain notifications extending the statutory time limits.
The Court noted that the proceedings related to the tax period July 2017 to March 2018. Although the relevant returns were due between August 2017 and April 2019, the petitioner filed them between April 2019 and August 2019. The petitioner relied on the retrospective insertion of Section 16(5) of the CGST Act, effective from 1 July 2017, which provides relief for ITC pertaining to financial years 2017-18 to 2020-21 where the relevant returns were filed by 30 November 2021. The amendment was not part of the statute when the original adjudication order was passed.
The High Court observed that the petitioner’s returns had been filed before the statutory cut-off date of 30 November 2021 and that the relevant tax period fell within the years covered by the retrospective amendment. It was satisfied that the petitioner was entitled to the benefit of Section 16(5). However, rather than finally determining the administrative consequences itself, the Court directed the proper authority to reconsider enforcement of the demand and issue a formal order after giving the petitioner an opportunity.
Accordingly, the High Court allowed the writ petition and quashed the adjudication order dated 1 December 2023, restoring the proceedings to the first respondent for an order consistent with the Court’s observations on ITC eligibility. The petitioner was permitted to submit a certified copy of the judgment by 30 October 2026, and the authority was directed to communicate its order by 30 November 2026. The judgment provides relief based on the retrospective statutory amendment without separately adjudicating the broader constitutional challenges raised in the petition.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
The petitioner’s grievance is with the Adjudication Order dated 01.12.2023 under Section 73 of the Central Goods and Services Tax Act, 2017/Karnataka Goods and Services Tax Act, 2017 [for short, ‘the Act’]. The details of the Adjudication Order and the Summary thereof are as follows.
| Sl. No. | Particulars | Dated | Provisions of KGST Act, 2017 | Annexure |
|---|---|---|---|---|
| 1 | Order of Adjudication | 01.12.2023 | 73[9] | A1 |
| 2 | Summary of the Order | 02.12.2023 | A2 | |
| 3 | Show Cause Notice | 30.09.2023 | 73 | A3 |
| 4 | Summary of the Show Cause Notice | 30.09.2023 | A4 |
2. Mr. Pranay Sharma Y, the learned counsel for the petitioner, and Ms. Malavika Prasad, the learned High Court Government Pleader for the respondents, are heard for disposal of the petition with the petitioner placing reliance upon the amendment with the insertion of Section 16[5] of the Act with effect from 01.07.2017.
3. The proceedings against the petitioner, as could be seen from the tabular column that is part of the Adjudication Order, is because the petitioner has filed Returns beyond the due date for filing such Returns. The impugned Order relates to the period between July 2017 to March 2018, and the petitioner, who had to file Returns for the corresponding months, between August 2017 to April 2019 has filed the Returns in the months between April 2019 to August 2019. Whether the delay in filing the Returns could defeat the Registered Taxable Person’s right to Input Tax Credit [ITC] is addressed with the insertion of sub-clause [5] to Section 16 of the Act with effect from 01.07.2017.
4. This amendment reads that the Registered Taxable Person will be entitled to ITC in any Return that is filed upto 30.11.2021 for the Returns pertaining to the years 2017-18 to 2020-21. This amendment was not on the Statute Book when the impugned Order is passed. The petitioner’s case is that this amendment must apply in this case, and undisputedly it is because the subject tax period is between the period mentioned in the amendment.
5. However, this Court is of the considered view that whether there must be any enforcement in the light of this amendment must be reconsidered with opportunity to the petitioner with a formal order because it is shown to this Court’s satisfaction that the petitioner will be entitled to the ITC because the Returns have been filed before 30.11.2021. In the light of the afore, the following.
ORDER
[A] The petition is allowed quashing the impugned Adjudication Order dated 01.12.2023 [Annexure-A1] restoring the proceedings to the first respondent to pass a formal order in the light of this Court’s observation on the petitioner being entitled to ITC in the light of the retrospective insertion of Section 16[5] of the Act.
[B] The petitioner is reserved with liberty to file a certified copy of this Order with the first respondent, who shall communicate the Order in terms of this Court’s observation by 30.10.2026 and the first respondent shall communicate the order in terms of this Court’s observation to the petitioner by 30.11.2026.
