Hon’ble Calcutta High Court has issued notice to Centre and State Government in the matter of Latika Ghosh Vs ACST, Raiganj Charge & others, W.P. A. No. 7272 of 2020, in the matter of Rainbow Infrastructure Pvt. Ltd. Vs. ACST, Barrackpore Zone & ors, WPA No. 77159 of 2020 wherein the petitioner has challenged the constitutional validity and vires of 16(4) of the CGST Act 2017/WBGST Act 2017, to the extent that it seeks to deny ITC if it is not taken within due date of furnishing of the return under section 39 of the Act for the month of September following the end of financial year to which any invoice or debit note pertains or furnishing of annual return, whichever is earlier. The petition is alternatively praying for declaration of the conditions as prescribed in Section 16(4) of the Act as merely procedural in nature which cannot override substantive conditions as mandated under Section 16(1) and Section 16(2) of the Act.
The petition is also challenging the constitutional validity of retrospective amendment of Rule 61 of the CGST Rules, 2017/WBGST Rules, 2017.
Further petition is also praying for declaration of return required to be furnished in Form GSTR- 3B as an incomplete, non est and invalid return in the eye of law.
The matter is being argued by Advocate Vinay Shraff with Advocate Himangshu Kumar Ray on the ground that if the restriction under Section 16(4) of the Act is invoked and ITC is denied then the ‘non-obstante clause’ in Section 16(2) of the Act would cease to have any meaning or purpose and would be rendered otiose. It is being further argued that ITC is not taken through return but instead it is taken through the books of accounts immediately on receipt of goods or services in terms of 1st proviso to Section 16(2) of the Act. It is also being argued that the provision of section 16(4) of the CGST Act,2017/WBGST Act, 2017 is arbitrary and unreasonable as they are violative of Article 14. Further they are also violative of Article 19(1)(g) and Article 300A of the Constitution. Further, the denial of ITC would defeat the object of the 122nd Constitutional Amendment Bill, 2017, that is to avoid the cascading effect of taxes.