ITC not eligible for Late Returns under CGST Act Section 16(4): Calcutta HC

In a groundbreaking legal development, the Calcutta High Court recently delivered a pivotal judgment on the eligibility of Input Tax Credit (ITC) for businesses filing late Goods and Services Tax (GST) returns. The case of BBA Infrastructure Ltd. v. Senior Joint Commissioner of State Tax has far-reaching implications for taxpayers, shedding light on the intricate dynamics of compliance within the Central Goods and Services Tax Act, 2017 (CGST Act).

 

Table Section
1. Introduction
2. Understanding the Case:
3. Key Takeaways from the Calcutta High Court's Ruling:
4. Practical Implications for Businesses:
5. Recent Developments and Industry Insights:
6. FAQs

 

Understanding the Case:

BBA Infrastructure Ltd., the petitioner, found itself entangled in a legal battle when the Revenue Department issued a Show Cause Notice, challenging the admissibility of ITC for the period from November 2018 to March 2019. The crux of the matter was the late filing of returns for the financial year 2018-2019, breaching the statutory time limit of October 29, 2019.

 

 

 

Key Takeaways from the Calcutta High Court's Ruling:

1. Stricter Construction of Concessions: The court emphasized the need for a meticulous interpretation of conditions governing concessions, asserting that compliance with the time limit outlined in Section 16(4) of the CGST Act is non-negotiable. Timely filing is not at the discretion of the dealer.

2. ITC as a Conditional Concession: The judgment clarified that ITC is not an absolute right but a concession bestowed by the Act. Adherence to the statute's terms, particularly the mandatory eligibility criteria in Section 16(2) of the CGST Act, is imperative for businesses.

3. Non-Obstante Clause and Constitutional Validity: The court delved into the non-obstante clause in Section 16(2), underscoring its supremacy over Section 16(4). It also dismissed concerns about the constitutionality of Section 16(4), asserting that it aligns with the constitutional framework.

4. Consistency with Precedents: The judgment drew parallels with decisions from other high courts, reinforcing the validity of Section 16(4) and the overarching structure of the CGST Act. Notable references include judgments from the Andhra Pradesh High Court and the Patna High Court.

 

Practical Implications for Businesses:

The Calcutta High Court's ruling serves as a stern reminder to businesses about the critical importance of adhering to GST return filing timelines. Failure to comply with the statutory provisions, especially those outlined in Section 16(4), can lead to the denial of ITC, impacting a company's financial standing.

 

Recent Developments and Industry Insights:

The article also sheds light on recent developments, including the Supreme Court's notice challenging a Patna High Court judgment and the Madras High Court's decision allowing belated returns in cases of financial hardship. These developments highlight the evolving nature of GST-related regulations.

 

(FAQs)

 

In conclusion, the Calcutta High Court's decisive judgment underscores the need for businesses to navigate the complex landscape of GST compliance with utmost diligence. Staying informed about legal developments, adhering to statutory timelines, and fulfilling eligibility criteria are crucial steps to safeguard a company's entitlement to Input Tax Credit under the CGST Act.