Vinod Udaipuri Vs Union of India (Jharkhand High Court)

The Jharkhand High Court disposed of the writ petition filed by Vinod Udaipuri Vs Union of India, which challenged the constitutional validity of Section 16(4) of the Central Goods and Services Tax (CGST) Act, 2017, and sought to quash an order disallowing Input Tax Credit (ITC).The Core IssueThe petitioner sought to challenge the disallowance of Rs. 30,29,010 in ITC for the period July 2018 to March 2019, imposed along with interest and an equal penalty. The disallowance was based on the petitioner’s alleged violation of §16(4), which sets a time limit for availing ITC. The petitioner also challenged the constitutional validity of §16(4) and the retrospective validation of GSTR-3B as a return under Rule 61(5).Impact of the Finance Act, 2024During the proceedings, counsel for both the petitioner and the Union of India submitted that the matter required a fresh adjudication due to the insertion of a new provision: Section 16(5) of the CGST Act, 2017, via Section 118 of the Finance Act, 2024.This new sub-section was made retrospectively effective from July 1, 2017. Crucially, §16(5) provided a non-obstante clause stating: “Notwithstanding anything contained in sub-section (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.”Court’s Holding and DirectionThe High Court observed that the initial disallowance was made without considering the extended time limit now stipulated under the newly inserted §16(5). Since the new retrospective provision directly impacted the legality of the original order by providing a grace period for availing ITC (up to November 30, 2021), and both parties consented to a re-evaluation, the Court held that the matter must be decided afresh.The Jharkhand High Court, therefore, quashed and set aside the original Order-in-Original dated May 19, 2023, and the consequential Summary of Order. The matter was remitted to the authority to pass a fresh order, specifically taking into consideration the implication of §16(5) of the CGST Act. The authority was directed to take a decision within two months. The court clarified that it had not entered into the merits of the constitutional challenges.