Section 16(2), CGST Act, 2017 which laid down 4 conditions for availment of ITC & starts with notwithstanding clause meaning thereby that it supersedes sub-section 4 of section 16, based on the following cases;

(2020) 33 J.K.Jain’s GST & VR 9 Synergy Fertichem Pvt. Ltd. v. State of Gujarat  (Guj),  A.C.T.O. v. Laxmi Misthan Bhandar (Raj) (1989) 74 STC 260, Central Bank of India v. State of Kerala (2009) 4 SCC 9 (SC),

Beyond this, no more conditions can be put under GST Act by framing rules or otherwise. Quoting contrary Judgments of other courts will be beyond legislature in this regard.

ITC is a vested property right under Article 300A, Constitution of India per recent judgment in Union of India & Ors. v. Adfert Technologies Pvt. Ltd. (2020) 33 J.K.Jain’s GST & VR 147 (SC).  Previously also, ITC/CNVAT Credit was held to be a vested right, which can not be allowed to be lapsed vide case laws─(1999) 106 ELT 3  Eicher Motors Ltd. v. Union of India(SC),

(2019) 32 J.K.Jain’s GST & VR 267 Siddharth Enterprises v. The Nodal Officer & Ors. (Guj)*.

*The review petition filed by the Govt. has been dismissed by the court (2020) 33 J.K.Jain’s GST & VR 160 Nodal Officer & Ors. v. Siddharth Enterprises (Guj)

The Hon’ble Supreme Court held that “every taxing statue including, charging, computation and exemption clause (at the threshold stage) should be interpreted strictly per SC case (2018) 30 J.K.Jain’s GST & VR 105 Commissioner of Customs v. Dilip Kumar and Company per SC case (2017) 28 J.K.Jain’s GST & VR 162 State of Karnataka v. M.K. Agro Tech Pvt. Ltd.. It is settled proposition of law that taxing statutes are to be interpreted literally and nothing could be added to what is stated in the itself per SC case (2011) 16 J.K.Jain’s Vat Reporter 120 Eureka Forbes Limited v. State of Bihar and Ors..

The court only interprets the law within the four corners of the Act and cannot legislate it under the disguise of interpretation.

Sub-clause (d) of section 16 stipulates “furnishing of return u/s 39 for entitlement of ITC”. This clause nowhere mentions “timely submission of returns and/or debarring rectification statute of any return belatedly, for being entitled to avail ITC. The “notwithstanding clause”, in the section 16(2) means that it supersedes[1] all the sub-sections of section 16 including sub-section (4).  As such, in our view, if a registered person has furnished returns &/or rectified any return belatedly, he is entitled to ITC and his vested right per SC Case (1999) 106 ELT 3 Eicher Motors Ltd. v. Union of India Can not be withdrawn.

The SLP filed by the Govt. against the decision of High Court of Punjab and Haryana in the case of Adfert Technologies Pvt. Ltd. has been dismissed by the Hon’ble Supreme court[2] on 28.2.2020, making the following ratio decidendi of P&H High Court as Final & binding on the lower courts

“The right to carry forward the Unutilized credit has been recognized as vested right and property in terms of Article 300A of the Constitution of India”.

Moreover, the Govt. has no legal authority to retain the amount of credit to which the respondent is entitled to and retention of it by the Govt., cannot be sustained, being violative of Article 265 of the Constitution of India Per Gujarat HC case of Jakap Metind Pvt. Ltd. v. Union of India & Ors. (2019) 32 J.K.Jain’s GST & VR 473 (Guj).

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March 2021