M/S. BBA INFRASTRUCTURE LIMITED v. SENIOR JOINT COMMISSIONER OF STATE TAX AND OTHERS

#2. Mr. Vinay Shraff, learned Advocate appearing for the appellant submitted that though this appeal is against an order refusing to grant interim orders, requested this Court to hear the writ petition as well as questions of law are involved in the writ petition and may not even require an affidavit to be filed by the respondent. Mr. T.M. Siddiqui, learned Additional Government Pleader appearing for the respondent submitted that one opportunity may be granted to the respondents to file their affidavit-in- opposition which request was granted by order dated 23.06.2023 and after the affidavit-in-opposition was filed by the respondent, the appeal as well as the writ petition were heard and are now disposed of by this common judgment and order.

#3. The appellant filed the writ petition challenging an order-in-appeal dated

04.01.2023 and sought for a consequential direction upon the respondent to refund the tax amounting to Rs.28,63,680/- which is alleged to have been recovered by the appellant in excess of 10% of disputed tax amount and to prohibit the respondents from taking further cohesive action against the MAT NO. 1099 OF 2023 REPORTABLE appellant. The order impugned in the writ petition was passed under Section 107 of the Central Goods and Services Tax Act, 2017 and West Bengal Goods and Services Tax Act, 2017 (hereinafter referred as the GST Act) whereby the Input Tax Credit availed by the appellant amounting to Rs. 28,65,780/- from the period from November, 2018 to March 2019 was denied on the ground that the returns for the said period was filed beyond the statutory time limit stipulated in Section 16(4) of the GST Act, which time limit expired on 20.10.2019.

#4. Facts leading to the filing of the writ petition are that a show-cause notice dated 28.10.2020 was issued to the appellant calling upon the appellant to explain as to why Input Tax Credit amounting to Rs. 28,64,780/- for the period from November, 2018 to March, 2019 should not be denied as returns for the FY 2018-19 were filed beyond the statutory time limit that is 29.10.2019. The appellant by a representation dated

25.11.2020 requested for extension of time. On 04.01.2021 the second respondent passed an order directing the appellant to pay tax, penalty and interest on the ground that the statute has set down a time frame within which a taxable registered person can claim ITC. The appellant appears to have not paid the tax, penalty and interest as demanded and reminder was sent by the department on 06.09.2021 to deposit the entire dues on or before 10.09.2021. The appellant did not comply with the demand and consequently the department on 11.09.2021 debited the amount from the electronic cash ledger/ credit ledger of the appellant. The appellant filed an appeal before the statutory appellate authority. On 07.05.2022 the appellant was intimated by the office of the appellate authority that they have not MAT NO. 1099 OF 2023 REPORTABLE deposited any pre-deposit amount on the disputed demand of tax. The appellant sent a reply on 01.06.2022 stating that the officer in-charge had initiated recovery proceedings and debited a sum of Rs. 11,62,099/- from the CGST Credit ledger and Rs. 11,34,291/- from the SGST credit ledger along with the interest from each cash ledger balances. The first respondent, the appellant authority by order dated 04.01.2023 confirmed the order passed by the second respondent holding that the statute has set a time frame within which the appellant can avail and utilize input tax credit and the appellant having done so beyond the time limit i.e. 20.10.2019 is not entitled for the ITC.

#5. We have elaborately heard Mr. Vinay Shraff, learned Advocate appearing for the appellant assisted by Ms. Priya Sarah Paul, learned advocate for the appellant and Mr. T.M. Siddiqui, learned Additional Government Pleader assisted by Mr. T. Chakraborty and Mr. S Sanyal for the respondent department.

#6. The appellant’s case is that they had submitted the returns in GSTR-3B for the period from November, 2018 to March, 209 on 20.10.2019 which is admittedly beyond the due date of submission of the return for the month of September, 2019. The department’s contention is that the returns having been filed beyond the statutory time limit the appellant becomes ineligible for Input Tax Credit and consequently he has to reverse the credit taken and having willfully mis-stated the particulars and availed the benefit they are liable to pay penalty. The contention of the appellant is that Input Tax Credit is not taken through the return but it is taken through the books of account immediately on receipt of goods and services in terms of first MAT NO. 1099 OF 2023 REPORTABLE proviso to Section 16(2) of the GST Act. Therefore, it is submitted that the time limit under Section 16(4) cannot supersede or override the scheme of the statute as operation of Section 16(4) makes the non-obstante provision namely Section 16(2) meaningless. In other words, it is contended that Section 16(2) has overriding effect on Section 16(4) as is evident from the words used in the statute, “entitled to take credit”. Thus, it is contended entitlement of a particular right after fulfilling the prescribed and specified conditions results into a right, “taking” or “availing” or “utilizing” that right through procedural formalities or furnishing a return by the person who is entitled to that right is a matter of his choice. Further, it is the case of the appellant that in Section 16(1) of the GST Act, there is no mention of any time limit or time element and there is no visible linkage of Sub-section (1) with Sub-section (4) of Section 16. The learned Advocate for the appellant elaborately referred to the minutes of the 18th GST Council meeting held on 30th June, 2017 with particular reference to the type of returns to be filed etc. Reliance was placed on the decision of the Hon’ble Supreme Court in Union of India Versus Bharti Airtel Ltd.1 Reference was also made to the notification issued by the Government in Notification No. 12 of 2019-CT dated 07.03.2019 and Notification No. 76/2018-CT dated 31.12.2018 which pertained to the time limit for filing the monthly return from April, 2019 to June, 2019 which was extended and with regard to period from July, 2017 to September, 2019 wherein the late fee payable under Section 47 of the Act was waived. With regard to the extreme hardship which will be faced by the 1 2021 (131) Taxmann.com 319 (SC) MAT NO. 1099 OF 2023 REPORTABLE dealer/ assessee a reference was made to the decision in the case of Indsur Global Ltd. Versus. Union of India 2.

#7. The respondents seek to sustain the orders passed by the authorities contending that the statute should be interpreted in the light of the entire text and exception clauses or non-obstante clauses should not be interpreted in isolation from the main enacting provision. It is submitted that the purpose of non-obstante clause must be ascertained with which the legislature has inserted it. Non-obstante clause is employed to give overriding effect to some contrary provision but not complementary provision. It is enacted to give the enacting part of the section in case of conflict and overriding effect over the provision of the Act or the contract mentioned in the non-obstante clause. The language of Section 16 is clear that the non-obstante clause in Section 16(2) does not in any manner limit the operation of Section 16(3) or Section 16(4) and they are not contradicting, rather they all being to restrict the provisions, are basically complementing each other and are limiting the scope and operation of Section 16(4). Further, it is submitted that the legislative intent is not to make Section 16(4) otiose by applying Section 16(2) of the Act. Conjoint reading of Section 16(2)(d) and Section 16(4) make it clear that the entitlement to the credit of any Input Tax in respect of any supply of goods or services or both arises after filing of return under Section 39 of the Act. This condition is further qualified by imposing a time limit under Section 16(4). Admittedly, in the case of the appellant the returns were filed well beyond the period stipulated under Section 16(4). The imposition of penalty 2 2014 (310) ELT 833 (Guj) MAT NO. 1099 OF 2023 REPORTABLE was well justified as the appellant had committed fraud by making a false and dishonest representation in GSTR-3B return for the aforementioned period and claimed ineligible ITC and thereby reducing the net tax liability.

#8. This being a fraudulent claim, penalty is liable to be imposed and rightly imposed. In support of his contention, learned Additional Government Pleader placed reliance on the decision in The State of Tamil Nadu Versus M.K. Kandaswami and Others 3 ALD Automotive Private Limited 4 TVS Motor Company Limited Versus State of Tamil Nadu and Others 5. The decision of the High Court of Andhra Pradesh in Thirumalakonda Plywoods Versus The Assistant Commissioner- State Tax WP 24235 of 2022 dated 18.07.2023 and the decision of the High Court of Judicature at Patna in Gobinda Construction Versus Union of India and others in Civil Writ Jurisdiction Case No. 9108 of 2021 dated

08.09.2021.

#9. The Hon’ble Supreme Court in ALD Automotive Private Limited while considering a challenge to Section 19(11) of the Tamil Nadu Value Added Tax Act, 2006 requiring the claim for Input Tax Credit to be made within 90 days from the date of purchase or before the end of the financial year whichever is later as being ultra vires to a statutory claim of the Act, considered as to the principles for interpreting law dealing with economic activities. While doing so, the Hon’ble Supreme Court referred to the decision of the Constitution Bench in R.K. Garg and Others Versus Union