Andhra Pradesh High Court Validates ITC Time Limit; Rejects Constitutional Infringement
Andhra Pradesh High Court Validates ITC Time Limit; Rejects Constitutional Infringement
In a recent judgment, the Andhra Pradesh High Court has established that the time limit specified for claiming Input Tax Credit (ITC) as per Section 16(4) of the Andhra Pradesh Goods and Services Tax Act (APGST) and the Central Goods and Services Tax Act (CGST Act) remains in accordance with Articles 14, 19(1)(g), and 300-A of the Constitution of India.
The Court emphasised that the existence of a non-obstante clause within Section 16(2) of the APGST/CGST Act does not supersede the provisions of Section 16(4) of the same Act. The Court underlined that both these sections serve distinct objectives and do not conflict with each other.
The main issue presented in the current case pertains to Thirumalakonda Plywoods (petitioner), who sought a writ of mandamus with the objective of declaring Section 16(4) of the APGST Act, 2017, and Section 16(4) of the CGST Act as contrary to Article 14, 19(1)(g), and Section 300-A of the Constitution of India.
The petitioner's argument cantered on the precedence of the non-obstante clause in Section 16(2) of the APGST/CGST Act over Section 16(4). In addition, the petitioner contested a government notification issued by the Government of Andhra Pradesh, which extended the return-filing deadline exclusively for non-resident taxpayers during the COVID-19 pandemic. The petitioner alleged that this notification was arbitrary and infringed upon the principles of Article 14.
The Division Bench, comprising Justices U. Durga Prasad Rao and T. Mallikarjuna Rao, conducted a thorough analysis of Section 16 of the APGST Act. This section outlines the prerequisites and terms under which a GST assessee can avail of Input Tax Credit (ITC) for supplies of goods or services employed or intended for use in advancing their business activities. The Bench observed that while Section 16(2) sets the groundwork for qualifying for ITC, subsections (3) and (4) introduce supplementary conditions or constraints governing ITC claims.
In essence, despite a GST assessee satisfying the fundamental qualification criteria outlined in Section 16(2), they might still be ineligible to claim ITC if their circumstances align with the limitations specified in subsections (3) and (4).
The Bench went on to provide a clarifying explanation regarding the non-obstante clause, describing it as a legislative mechanism frequently employed to grant prevailing authority to specific provisions in the face of potentially conflicting provisions within the same statute or across separate statutes. It is incumbent upon the Court to ascertain the scope of the legislative intent behind this device, particularly in determining the degree to which the portion of the provision following the non-obstante clause should take precedence over the remainder of the provisions.
The Bench observed that Section 16(2) and Section 16(4) operate as distinct regulatory provisions. While Section 16(2) sets out the conditions for eligibility, Section 16(4) establishes a timeframe for asserting ITC claims. Given that these provisions do not conflict and fulfil separate objectives, the non-obstante clause in Section 16(2) does not nullify the applicability of Section 16(4).
Addressing the petitioner's stance concerning the pandemic-related notification, the Bench concluded that ITC is granted by the government as a form of concession, rebate, or privilege, rather than an inherent statutory or constitutional entitlement. As a result, the government retains the discretion to introduce reasonable stipulations, including temporal constraints, for availing such privileges.
Moreover, the Bench underscored the divergent realms of influence between Section 16 of the APGST/CGST Act and the constitutional provisions embodied in Articles 14, 19(1)(g), and 300-A. The imposition of a time limit for ITC claims, the Bench maintained, does not transgress constitutional rights.
To conclude, the Bench affirmed that the stipulated time limit outlined in Section 16(4) of the APGST Act/CGST Act for asserting ITC is legitimate and does not contravene constitutional provisions. The Bench further affirmed that Section 16(2) does not supersede Section 16(4), with both provisions maintaining autonomous functionality.
