The Gauhati High Court has upheld the constitutional validity of Rule 36(4) of CGST Rules which imposes conditions to avail input tax credit (ITC).
The bench of Chief Justice Mr. Vijay Bishnoi and Justice N. Unni Krishnan Nair has observed that Rule 36 of CGST Rules and in particular sub-Rule (4) of Rule 36 derives power from Section 16 of the CGST Act as well as from the general powers conferred by the CGST Act.
The petitioner/assessee, M/s High Tech Ecogreen Contractors LLP challenged the order passed by the Additional Commissioner, CGST & Central Excise, Guwahati (Additional Commissioner).
The Additional Commissioner confirmed and ordered payment of interest for delayed payment of GST for the period from July, 2017 to March, 2021 and confirmed demand of ITC amounting to Rs.1,38,39,950/- in respect of ineligible Input Tax Credit (ITC) availed in terms of Section 74(9) of the CGST Act, 2017 and the corresponding Section of Assam GST Act, 2017.
The order confirmed realisation of interest on the confirmed amount of Rs.1,38,39,950/- at the rates applicable in terms of Section 50 of the CGST Act, 2017 and the corresponding Section of Assam GST Act, 2017 and imposed a penalty of Rs.1,38,39,950/- in terms of Section 74(9) of the CGST Act, 2017 and the corresponding Section of Assam GST Act, 2017 for wrong availment of ITC.
The petitioner has also challenged the constitutional validity of Rule 36(4) of the Central Goods and Services Tax/Assam Goods and Services Tax Rules, 2017.
The court held that since a statutory remedy is available to the petitioner to challenge the validity of the order passed by the Commissioner (Appeals) and Additional Commissioner, respectively, the challenge of the petitioner to the orders cannot be entertained.
The court held that the petitioner has laid challenge to sub-rule (4) of Rule 36 of CGST Rules only with the intention to bypass statutory remedy of appeal which the petitioner can prefer under Section 112(1) of the CGST Act read with Rule 110 of CGST Rules because if the petitioner was aggrieved by sub-rule (4) of Rule 36, he could have challenged the validity of the same immediately after passing of the order dated 31.03.2023 by the Additional Commissioner instead of filing an appeal before the Commissioner (Appeals). Such a course cannot be appreciated.
Case Details
Case Title: M/S High Tech Ecogreen Contractors Llp Versus The Joint Director
Case No.: WP(C)/4787/2024
Date: 25.02.2025
Counsel For Petitioner: V. Shraff
Counsel For Respondent: S.C. Keyal
