Case Summary
Case Title: R.K. Enterprises v. Assistant Commissioner of Central Taxes
Court: High Court of Judicature at Madras
Petition Nos.: W.P.Nos.3457 of 2022 etc. batch
Date of Judgment: 02.07.2025
Category: Input Tax Credit (ITC) – Challenge to Section 16(4) and 16(2)(c), validity of SCNs/assessment orders
Relevant Sections: Section 16(2)(c), Section 16(4), Section 16(5) of the CGST Act, 2017; Rule 61(5) of CGST Rules, 2017; Section 118 of Finance Act, 2024; Circular No.237/31/2024-GST dated 15.10.2024
Facts (Paras 1–3)
A batch of 36 writ petitions was filed before the Madras High Court. The first set of petitions challenged the constitutional validity of Section 16(2)(c) and Section 16(4) of the CGST Act, 2017, and Rule 61(5) of the CGST Rules, 2017, arguing that they restricted entitlement to ITC arbitrarily. The second set of petitions assailed show cause notices and assessment orders denying ITC on grounds of delayed availment or non-fulfilment of statutory conditions.
Questions (Paras 1–2)
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Whether Section 16(2)(c), Section 16(4), and Rule 61(5) are unconstitutional and liable to be struck down.
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Whether show cause notices and assessment orders issued for ITC denial, relating to FY 2017–18 to 2020–21, could survive in light of subsequent legislative amendments.
Observations (Paras 3–6)
The Court noted that several petitioners chose to withdraw challenges to the vires of Section 16(2)(c), Section 16(4), and Rule 61(5). Recording the memos and endorsements, these writ petitions were dismissed as withdrawn.
In respect of the second set, the Court considered Section 16(5), introduced by Section 118 of the Finance Act, 2024, which extended the timeline for availing ITC and settled pending disputes. Since the ITC claims in dispute pertained to FYs 2017–18 to 2020–21 and were made before 30.11.2021, the Court held that the impugned show cause notices and assessment orders stood covered by the beneficial amendment.
Judgment (Paras 4–7)
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Petitions challenging vires of Section 16(2)(c), Section 16(4), and Rule 61(5) were dismissed as withdrawn.
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Petitions challenging SCNs/assessment orders were allowed, with the SCNs and orders quashed in light of Section 16(5).
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The Court clarified that any tax already remitted pursuant to such demands would not be refunded, in terms of Circular No.237/31/2024-GST dated 15.10.2024.
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No costs were awarded, and connected miscellaneous petitions were closed.
Table of Cases Referred
| Case | Issue | Verdict |
|---|---|---|
| Batch of WPs (first set) | Challenge to vires of Section 16(2)(c), 16(4), Rule 61(5) | Withdrawn by petitioners, dismissed accordingly |
| Batch of WPs (second set) | Challenge to SCNs/assessment orders denying ITC | Allowed; SCNs and orders quashed based on Section 16(5) amendment |
Between Fine Lines
For businesses, this judgment confirms that ITC claims up to FY 2020–21, made before 30.11.2021, are protected by the 2024 amendment introducing Section 16(5). Pending demands or SCNs for such years cannot survive, though refunds of payments already made are barred. Importantly, the Court did not strike down Section 16(2)(c) or 16(4); those challenges were withdrawn, leaving the provisions intact.
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