AP HC: Section 16(2) Not Overrides 16(4), Both Sections Serve Different Purposes

AP HC's Order for Thirumalakonda Plywoods

Section 16(2) of the Central Goods and Services Tax (CGST) Act, 2017 does not have an overriding effect on section 16(4) since both sections would be regarded as mutually exclusive and independent in their functioning, the High Court of Andhra Pradesh ruled.

The decision was issued in response to a writ petition that the taxpayer Thirumalakonda Plywoods filed via its single proprietor Kondalaiah Sunduru, who questioned the constitutionality and interaction of these clauses. Thirumalakonda Plywoods, the petitioner assessee, operates a hardware and plywood company in Andhra Pradesh.

The petitioner's objections to the Assistant Commissioner of State Tax order recommending tax, penalty, and interest owing to their late submission of monthly reports and Input Tax Credit (ITC) claims formed the basis of the dispute.

The ITC idea allows purchasers to deduct the tax paid on purchases from the tax owed on sales. It is intended to eliminate the tax cascading impact. Section 16(2) of the Andhra Pradesh Goods and Services Tax (APGST) Act specifies the requirements for ITC eligibility, whereas subsections (3) and (4) levy conditions and limits. Section 16(4) limits ITC claims if returns would not be submitted under the set time.

The applicant, represented via Sri Rama Krishna Kumar Potturi had argued that Section 16(2), which summarizes the eligibility for Input Tax Credit (ITC), must substitute Section 16(4), which levies time limitations for the claims of ITC. As such, if the conditions stipulated in Section 16(2) would be satisfied, the ITC claim period under Section 16(4) should no longer be important.

But the High Court of Andhra Pradesh specified, two sections would vary and must be regarded as separate provisions.

Section 16(2) and Section 16(4) function for distinct purposes under the framework of the CGST Act, the bench emphasized.

Section 16(2) is a restrictive provision that shows the eligibility criteria for Input tax credit while section 16(4) levies a restriction of time to claim the ITC, set under the norms of the bench.

The court stated that the non-obstante provision in Section 16(2) of the CGST Act does not nullify the time restriction specified in Section 16(4) of the CGST Act. The bench stressed that firms must comply with both of these clauses in order to claim ITC under the CGST Act, and it shed light on the complicated interaction of such sections.

The non-obstante clause in Section 16(2) does not overrule Section 16(4) since these laws are not contradictory. The court emphasized that if Section 16(2) was designed to override Section 16(4), the legislative intent would not have necessitated Section 16(4).

The division bench, Justice U. Durga Prasad Rao and Justice T. Mallikarjuna Rao dismissed the writ petition highlighting the interpretation and application of Section 16(2) and Section 16(4) of the CGST Act and therefore resolved the intricacies surrounding these Sections.

Read High Court Order

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