Very very important judgment on 16(4)

Very very important judgment on 16(4).

Two VVV Imp points about 16(4)_observed by MP high court while accepting writs

In a pivotal ruling, the Madhya Pradesh High Court quashed show cause notices and assessment orders under Section 16(4) of the CGST Act, deeming the restriction on availing Input Tax Credit (ITC) for late returns arbitrary. The Court highlighted:

1-16(2) is not subject to 16(4)-However, imposition of a time limit through Section 16(4) would supersede or override this scheme of the statute operation of Section 16(4) makes the non-obstante section 16 (2) meaningless; Section 16 (2) has overriding effect on Section 16(4) and Section 16(2) has been drafted in a manner which shows clear legislative intent that it is not subject to Section 16(4)

2- Late fee and interest are enough to punish-

“Allowing a taxpayer to file returns with payment of late fees and then disallow him the ITC, because the return was filed belatedly, is punishing him twice for a single default so committed. Moreover, with the payment of late fee u/S 47 as well as payment of interest u/S 50, the treasury has been suitably compensated for the postponement of the tax.

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