Case Law Details
Bhardwaj Construction Vs Union of India (Patna High Court)
The petitioner challenged an order passed under Section 73 of the Bihar Goods and Services Tax Act, 2017 (BGST Act), whereby input tax credit (ITC) claimed on tax invoices/debit notes was disallowed on the ground that the credit had been availed beyond the prescribed or extended period under Section 16(4) of the BGST Act.
The petitioner submitted that although the order was passed on 06.03.2020, recovery was initiated subsequently. Relying on Circular No. 237/31/2024-GST dated 15.10.2024 issued by the Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing, the petitioner contended that Sections 16(5) and 16(6) of the CGST Act, inserted with effect from 01.07.2017 by Section 118 of the Finance (2) Act, 2024, retrospectively extended the time limit for availing ITC under Section 16(4) in specified cases. It was argued that the petitioner’s case fell within the retrospectively extended time limit and that the Section 73 order should be quashed with refund of the recovered amount along with statutory interest.
The State referred to Paragraph 3.5 of the same circular, which provides that where an order under Sections 73 or 74 of the CGST Act, or an appellate or revisional order under Sections 107 or 108, has confirmed demand for wrongful ITC due to contravention of Section 16(4), and no further appeal has been filed, the taxpayer may seek rectification under the special procedure prescribed under Section 148 of the CGST Act, as notified by Notification No. 22/2024-Central Tax dated 08.10.2024. The State submitted that the petitioner should pursue this statutory remedy instead of invoking writ jurisdiction. Reference was also made to Paragraphs 3.5.1 to 3.5.5 of the circular prescribing the rectification procedure.
The Patna High Court held that the petitioner’s contentions should be examined by the competent authority through the rectification mechanism provided in Paragraph 3.5 of the circular. The Court granted liberty to the petitioner to file a rectification application within one month. It directed the competent authority to consider the application, provide an opportunity of hearing, and pass an appropriate order in accordance with law within three months from the date of filing. The writ petition was disposed of accordingly.
FULL TEXT OF THE JUDGMENT/ORDER OF PATNA HIGH COURT
Heard learned counsel for the parties.
2. The grievance of the petitioner is against the order as contained in Annexure- P/2 passed under Section 73 of the Bihar Goods and Services Tax Act, 2017 (in short ‘BGST Act’). It is submitted that the credit taken by the petitioner of the tax invoices/ debit notes were disallowed on the ground that the availment of the tax invoices/ debit notes were beyond the prescribed period/ extended period prescribed under Section 16(4) of the BGST Act.
3. Learned counsel for the petitioner submits that although Annexure P/2 was passed sometime on 06.03.2020 but the recovery has been made at this stage. The petitioner has drawn the attention of this Court towards circular no. 237/31/2024-GST dated 15th October, 2024 issued by the Government of India in Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs GST Policy Wing. It is submitted that by this circular, clarifications have been given to with regard to the implementation of the provisions of sub-Section (5) and sub-Section (6) of Section 16 of the Central Goods and Services Tax Act, 2017 (in short ‘CGST Act’). According to the circular, sub-Section (5) and sub-Section (6) of Section 16 of the CGST Act have been inserted in Section 16 of the CGST Act with effect from the 1st day of July, 2017, vide Section 118 of the Finance (2) Act, 2024 whereby the time limit to avail input tax credit under provisions of sub-Section (4) of Section 16 of the CGST Act has been retrospectively extended in certain specified cases.
4. Learned counsel submits that the case of the petitioner would be covered under the retrospectively extended time limit. It is, thus, submitted that the order, as contained in Annexure P/2, is fit to be quashed and the amount recovered from the petitioner be refunded to the petitioner with statutory interest.
55. Vivek Prasad, learned GP 7 represents the State. Referring to the same circular, learned GP 7 points out Paragraph ‘3.5’ which reads as under:-
“where order under section 73 or section 74 of the CGST Act has been issued but no appeal against the said order has been filed with the Appellate Authority, or where the order under section 107 or section 108 of the CGST Act has been issued by the Appellate Authority or the Revisional Authority but no appeal against the said order has been filed with the Appellate Tribunal:
In such cases, where any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, and where appeal against the said order has not been filed, the concerned taxpayer may apply for rectification of such order under the special procedure under section 148 of the CGST Act notified vide Notification No. 22/2024-Central tax dated 08.10.2024, within a period of six months from the date of issuance of the said notification.”
6. Under Paragraph 3.5.1 to Paragraph 3.5.5, the procedures for filing of an application for rectification of an order issued under Section 73 or Section 74 of the CGST Act have been provided. It is his submission that instead of filing an application for rectification before the competent authority, petitioner has chosen to prefer a writ application. It is further submitted that this Court sitting in its writ jurisdiction need not examine as to whether the case of the petitioner would fall within the specified cases which would be covered under the retrospectively extended time limit.
7. Having regard to the entire facts and circumstances, the pleadings available on the record and the submissions of learned counsel for the parties, we are of the considered opinion that the contentions of the petitioner may be examined by the competent authority, if the petitioner prefers an application seeking rectification as provided under Paragraph 3.5 of the circular (Annexure P/1).
8. We grant liberty to the petitioner to file a rectification application within one month from today before the competent authority. If such an application is preferred within the given period, the competent authority shall examine the application, give an opportunity of hearing to the petitioner and pass an appropriate order in accordance with law within a period of three months from the date of filing of the rectification application.
9. This writ application stands disposed of accordingly.
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