M/S Manjunatha Exports Vs the Deputy Commissioner of Central Tax

M/S. MANJUNATHA EXPORTS, A PARTNERSHIP FIRM CONSTITUTED UNDER THE INDIAN PARTNERSHIP ACT, 1932, REPRESENTED BY ITS PARTNER, SRI. RAJINI G. K. S/O C. S. GURUSWAMY, AGED ABOUT 62 YEARS, NO. 554, 3^RD MAIN ROAD, 2^ND PHASE, 6^TH BLOCK, BANASHANKARI 3^RD STAGE, BENGALURU - 560 085.

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…PETITIONER

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Digitally signed by VIJAYA P Location: HIGH COURT OF KARNATAKA

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(BY SRI. VENKATESH G., ADVOCATE)

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AND:

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THE DEPUTY COMMISSIONER OF CENTRAL TAX, WEST DIVISION-5, BENGALURU WEST COMMISSIONERATE, 1^ST FLOOR, TTMC COMPLEX, BTMC BUS STAND, BANASHANKARI, BENGALURU-560070.

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THE ADDITIONAL COMMISSIONER OF CENTRAL TAX (APPEALS), OFFICE OF THE COMMISSIONER OF

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HC-KAR

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CENTRAL TAX (APPEALS). S1 AND S2, VINAYA MARG, SIDDARTHA NAGAR, MYSURU-570 011.

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THE SUPERINTENDENT OF CENTRAL TAX, RANGE-CWD5, BENGALURU WEST COMMISSIONERATE, BMTC BUS STAND COMPLEX, FIRST FLOOR, BANASHANKARI, BENGLURU-560 070.

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…RESPONDENTS

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(BY SRI. ARAVIND V. CHAVAN, ADVOCATE)

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER-IN-ORIGINAL NO.07/2021-22 WD5 DC DATED 03.08.2021 BEARING DIN: 20210857YU000000E567 PASSED BY THE RESPONDENT NO.1, HEREIN MARKED AS ANNEXURE-A AND ETC.,

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE S SUNIL DUTT YADAV

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HC-KAR

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ORAL ORDER

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The petitioner has sought for setting aside of the Order-in-Original at Annexure-A as well as the Order-inAppeal at Annexure-B. The petitioner has also sought for refund of statutory pre-deposit made under Section 107(6) of the Central Goods and Services Tax Act, 2017 (for short 'CGST Act').

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The case made out by the petitioner is that the form GSTR-3B for the month of March-2019 came to be filed online by the petitioner though belatedly on 28.10.2019. It is stated that respondent No.1 has issued show-cause notice, proposing to demand Input Tax Credit (ITC) amounting to Rs.27,21,200/- which allegedly had been availed in contravention of the provision of Section 16(4) of the CGST Act.

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It is the contention of the petitioner that the

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Assessing Authority had declined to permit the petitioner to claim ITC on the ground that it was belated in light of

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HC-KAR

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Section 16(4) of the CGST Act. It is submitted that by

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virtue of amendment to Section 16(5), which is a nonobstante clause, the time limit prescribed under Section 16(4) stood relaxed for the years of financial years 2017-18, 2018-19, 2019-20 and 2020-21 till 30^th day of November, 2021. Accordingly, it is submitted that by virtue of such amendment to the Finance Act with effect from 01.07.2017, though the appointed date is 27.09.2024, the petitioner is entitled for credit to the ITC availed.

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4. Perused the Order-in-Original and Order-in-

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Appeal. The only ground on which steps were taken to deny ITC claim is that it was claimed beyond the period prescribed under Section 16(4). Section 16(4) and Section 16(5) of the CGST Act reads as hereunder:

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" 16. Eligibility and conditions for taking

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input tax credit.

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(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or

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HC-KAR

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both after the [thirtieth day of November] following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier. (5) Nothwithstanding anything contained in subsection (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed upto the thirtieth day of November, 2021."

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It is pertinent to note that the Central Board of

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Indirect Taxes and Customs vide Circular No. 237/31/2024-GST dated 15.10.2024, issued to all Principal Chief Commissioners/Chief Commissioners/ principal Commissioners/ Commissioners of Central Tax (All) and Principal Director General/Directors General (All) has clarified the issues regarding implementation of provisions of sub-section (5) and sub-section (6) in section 16 of CGST Act, 2017. The Circular clarifies that sub-section (5) of Section 16 has been inserted retrospectively with effect

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HC-KAR

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from 01.07.2017 vide Finance (No.2) Act, 2024, thereby overriding the earlier time restriction prescribed under sub-section (4) of Section 16 in respect of the financial years 2017-18, 2018-19, 2019-20 and 2020-21. Subsection (5) to Section 16 was inserted by the Finance (No.2) Act, 2024, with retrospective effect from 01.017.2017. In pursuant thereof, the Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs, issued Notification No.17/2024-Central Tax, dated 27.09.2024, followed by Circular No. 237/31/2024GST dated 15.10.2024 providing clarification regarding the implementation of the said provision. The aforesaid legislative development by insertion of sub-section (5) to Section 16 through Finance (No.2) Act 2024, read with the clarification, affirms that claims of Input Tax Credit (ITC) availed through GSTR-3B returns filed up to 30th November 2021 shall be permissible. The relevant extract is reproduced hereunder:

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HC-KAR

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“Reference is invited to sub-section (5) and sub-section (6) of section 16 of the Central Goods & Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) inserted in section 16 of the CGST Act, with effect from the 1st day of July, 2017, vide section 118 of the Finance (No. 2) Act, 2024, whereby the time limit to avail input tax credit under provisions of sub-section (4) of section 16 of CGST Act has been retrospectively extended in certain specified cases.”

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It must be noticed that Section 16(5) was inserted by way of an amendment by Finance Act (No.2), 2024. The said clause is a non-obstante clause, as it states, "notwithstanding anything contained in sub-section (4)". If that were to be so, in light of the petitioner having claimed ITC with respect to the financial year 2018-19, by virtue of Section 16(5), petitioner's entitlement would be extended till 30.11.2021, whereas the return of the petitioner was filed on 28.10.2019. The return filed is within the extended time prescribed under Section 16(5).

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HC-KAR

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In light of the same, the Order-in-Original at

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Annexure-A as well as the Order-in-Appeal at Annexure-B are set aside. Matter is remitted to the stage of reply to show-cause notice. The petitioner to appear before the respondent No.1 on 15.04.2026.

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Needless to state, the authority to look into the factual aspects of eligibility of claim of ITC, but not to revisit the permissibility of claiming ITC by virtue of the extended time under Section 16(5) of the CGST Act, in light of the discussion made above. All other contentions are kept open.

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Accordingly, petition is disposed of .

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Sd/(S SUNIL DUTT YADAV) JUDGE

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MCR

M/S Manjunatha Exports v. the Deputy Commissioner of Central Tax

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M/S Manjunatha Exports v. the Deputy Commissioner of Central Tax

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