Shivneel Gas Sales Vs Assistant Commissioner of Commercial Taxes (Audit) (Karnataka High Court)
Summary: The Karnataka High Court considered Shivneel Gas Sales’ challenge to the adjudication order dated 1 December 2023 passed under Section 73 of the CGST/KGST Act for July 2017 to March 2018. The show cause notice and its summary were dated 30 September 2023, while the summary of the adjudication order was dated 2 December 2023. The proceedings arose from the petitioner’s belated filing of the relevant returns between April and August 2019. The petitioner relied upon the subsequent retrospective insertion of Section 16(5), effective from 1 July 2017, to claim entitlement to input tax credit despite the delay.
The Court noted that Section 16(5) permits ITC for FYs 2017-18 to 2020-21 through returns filed up to 30 November 2021. This amendment was not on the statute book when the impugned adjudication order was passed. The petitioner’s tax period undisputedly fell within the years covered by the amendment, and the relevant returns had been filed before the prescribed cut-off. The Court was consequently satisfied that the petitioner was entitled to input tax credit. It nevertheless held that whether any enforcement should continue in light of the amendment required reconsideration, with an opportunity to the petitioner and a formal order.
Accordingly, the Court allowed the petition, quashed the adjudication order dated 1 December 2023 and restored the proceedings to the first respondent to pass a formal order consistent with its observations recognising the petitioner’s ITC entitlement under the retrospective amendment. The petitioner was granted liberty to submit a certified copy of the Court’s order to the first respondent. Clause [B], as supplied, mentions communication of the order by 30 October 2026 and separately directs communication to the petitioner by 30 November 2026.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
1. 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-Al] 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.
