GST Transfer Petition challenging Constitutional Validity of Section 16(2)(c) dismissed by Supreme Court

In Union of India v. M/s Cummins Technologies India Pvt Ltd and Ors etc. [Transfer Petitions(Civil) Nos. 1481­-1482/2021 dated September 20, 2021] , the current transfer petitions have been filed to transfer two writs – M/s. SPL Infrastructure Private Limited v. Assistant Commissioner of State Tax, Narasannapeta and Ors [Writ Petition No. 7767 /2020] pending before the Hon’ble Andhra Pradesh High Court and M/s Cummins Technologies v. Union of India [Writ Petition No. 9443/ 2020] pending before the Hon’ble Madhya Pradesh High Court, which challenges the constitutional validity of Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (“CGST Act”).

The Hon’ble Supreme Court observed that there have been 34 other writ petitions filed challenging the same provision as in the current petition, the matters of which are pending across nine High Courts in the country. Section 16(2)(c) of the CGST Act 2017 provides that a registered dealer would be eligible for claiming Input Tax Credit (“ITC”) on the goods purchased on the condition that the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of such supply.

The Union of India (“Respondent”) contended that since the particular provision has already been challenged and the proceedings are pending across the Country, along with ramifications of huge amounts payable under the CGST Act are involved, it should be appropriate for the Hon’ble Supreme Court to hear the matter.

The Hon’ble Supreme Court noted that it is not inclined to entertain the petition on the ground that various High Courts are already seized of the matters. And specifically in M/s Cummins Technologies v. Union of India [Writ Petition No. 9443/ 2020] pending before the Hon’ble Madhya Pradesh High Court, counter affidavit has already been filed.

Therefore, the Hon’ble Supreme Court dismissed the transfer petitions and requested the Madhya Pradesh High Court to dispose of the Writ Petition (supra) pending before it within a period of two months.

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