Constitutional Validity of Rule 36(4) Challenged – Gujarat HC issues Notice

IN THE HIGH COURT OF GUJARAT
AT AHMEDABAD

The Text of the Order as follows :

1. We have heard Mr. Vinay Shah, the learned counsel appearing with Mr. Parth Shah, the learned counsel for the writ applicants.

2. The writ applicants seek to challenge the validity of Sub-rule (4) of the Rule 36 of the GST Rules on the ground that, the same is violative of Article 14 of the Constitution. It is argued that the Subrule (4) of the Rule 36 of the Rules speaks to restrict the ITC to a buyer of goods of services on the basis of the details of the outward supply furnished by the supplier of the services of goods or on the basis of the common portal. According to the learned counsel for the writ applicants, the same is unconstitutional being contrary to the scheme of the Act. It is further argued that the Rule in question puts an onerous and impossible burden on the buyer of the goods and service to ensure that the supplier of goods or services does in fact upload the details of the outward supplier on the common portal and if the supplier fails to do so, it has to face the risk of the benefit of the ITC big cap being blocked or is kept in suspension. It is argued that the rule in question is arbitrary, irrational and theref ore, violative of Article 14 of the Constitution. The learned counsel for the writ applicants has also placed reliance on the few decisions of the Supreme Court.

3. Let Notice be issued to the respondents, returnable on 12.02.2021. The respondents shall be served by email over and above the regular service through the Court.

4. In view of the order passed today, connected civil application stands disposed of.