Case Reference
M/s ITI Ltd v. Union of India & Ors
Gauhati High Court
WP(C)/184/2024
Judgment dated: 17.02.2025
Category of dispute: Input Tax Credit (Section 16(4), Section 16(5) of CGST Act, 2017)
Relevant Sections: Section 16(4), Section 16(5), Section 73 of the CGST Act, 2017
Facts (Para 1–2)
The petitioner, M/s ITI Ltd, challenged the constitutional validity of Section 16(4) of the CGST Act, 2017 and also sought to quash the notification dated 31.03.2023 extending time for passing orders under Section 73 of the Act. Additionally, the petitioner impugned an order dated 27.12.2023 passed by the Additional Commissioner, Dibrugarh (Respondent No. 7), raising demands without affording an opportunity of hearing. The petitioner argued that with the enactment of Finance Act, 2024, inserting Section 16(5), much of its grievance on ITC availment stood addressed, but principles of natural justice were still violated.
Questions (Para 2)
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Whether the order dated 27.12.2023 passed under the CGST Act without granting hearing was sustainable?
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Whether the insertion of Section 16(5) by Finance Act, 2024 had a bearing on the adjudication of the petitioner’s claim to input tax credit?
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Whether the matter required remand in light of the new amendment and principles of natural justice?
Observations (Para 2–3)
The Court observed that both parties agreed the grievance stood partly addressed by the new Section 16(5). The main issue was lack of opportunity of hearing. The respondents themselves conceded that the order could be remitted for reconsideration under the amended law. The Court found that failure to afford a hearing vitiated the impugned order, and therefore a remand was warranted.
Judgment (Para 3)
The Gauhati High Court set aside the order dated 27.12.2023 and remitted the matter back to the Additional Commissioner, Dibrugarh (Respondent No. 7). The Court directed that the issue be decided afresh under Section 16 as amended, and after granting an opportunity of hearing to the petitioner, within two months of submission of the certified copy of the judgment. The writ petition was accordingly disposed of.
Case Law Table
| Case | Court | Issue | Verdict |
|---|---|---|---|
| M/s ITI Ltd v. Union of India (2025) | Gauhati HC | Challenge to validity of Sec 16(4); grievance over denial of ITC; natural justice violation | Order set aside; matter remanded under amended Sec 16(5) after hearing |
Between Fine Lines
This judgment reinforces that no GST demand order can be sustained without affording proper opportunity of hearing to the taxpayer. Even where the substantive issue (such as ITC entitlement under Section 16) is clarified by an amendment, procedural fairness cannot be compromised. For trade and industry, this ruling signals that any adverse order passed mechanically without hearing can be successfully challenged, and remand is a likely remedy.
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