Baby Marine (Eastern) Exports Vs Union of India (Madras High Court)
Madras High Court held that provisions of section 16(2)(c) of the Central Goods and Services Tax Act, 2017 read with rule 36(4) of the Central Goods and Services Rules, 2017 are not violative of Article 14 of the Constitution of India. Accordingly, writ petition dismissed.
Facts- The present petition is filed under Article 226 of the Constitution of India, to issue a Writ of Declaration, declaring Section 16(2)(c) r/w Rule 36(4) of Goods and Service Tax Act and Rules, 2017 as illegal and unconstitutional to the extent to which it provides that the recipient is not entitled to take ITC if supplier has not paid collected tax to the Government.
Conclusion- The Division Bench of Madras High Court in the case of L & T Geostructure LLP Vs. Union of India reported in (2025) 30 Centax 453 (Mad.) considered the constitutional validity of Rule 36(4) of Goods and Service Tax Rules, 2017 and upheld the same and thereby dismissed the Writ Petition. It was held that the restrictions are reasonable and since they are intended to implement the laudable object of allowing legitimate / eligible Input Tax Credit (ITC). Therefore, the challenge to the restrictions imposed under Rule 36(4) of the respective GST Rules on the ground of it being arbitrary and violative of Article 14 of the Constitution of India cannot be countenanced. As such, these Writ Petitions are liable to be dismissed.
