Case Details: Reliance Jio Infocomm Ltd. vs. Union of India (2026) 40 Centax 88 (Mad.)
Judiciary and Counsel Details
- Manindra Mohan Shrivastava, CJ. & G. Arul Murugan, J.
- S/Shri Arvind P. Datar, Sr. Counsel & Rahul Unnikrishnan, for the Petitioner.
- S/Shri AR. L. Sundaresan, Addl. Solicitor General of India, Ms Revathi Manivannan, Sr. Standing Counsel, Haja Nazirudeen, Addl. Adv. General Assisted, V. Prashanth Kiran, Govt. Adv., Su. Srinivasan, Sr. Central Govt. Standing Counsel, S. Raveekumar, Govt. Pleader (Pondy) & V. Vasantha Kumar, Addl. Govt. Pleader (Pondy), for the Respondent.
Facts of the Case
The petitioner-assessee was registered as an Input Service Distributor (ISD) and proceedings were initiated through issuance of show cause notices alleging contravention of the time limit for distribution of input tax credit (ITC). The department alleged that ITC ought to have been distributed within the same month in which the underlying input service invoices were issued and that delayed distribution constituted a violation of the statutory framework. The petitioner contended that there was no statutory power to prescribe a strict time limit for distribution of ITC by an ISD unit and that the stipulation requiring distribution in the same month of invoice issuance was impracticable and arbitrary. It was further submitted that distribution could take place only after verification of the nature of the credit, identification of the recipient unit, and satisfaction of statutory conditions governing eligibility of ITC under the CGST Act and the Tamil Nadu GST Act. The matter was accordingly placed before the High Court.
High Court Held
The High Court held that the statutory scheme of Section 16 read with Section 20 of the CGST Act and the Tamil Nadu GST Act makes it clear that what is required to be distributed by an ISD is ‘input tax credit’ and not merely the input tax reflected in an invoice. The Court observed that ITC becomes available only upon fulfilment of the conditions prescribed under Section 16(2), including possession of a tax invoice, receipt of services, reporting of the invoice by the supplier, payment of tax to the Government, and furnishing of returns. It was held that Rule 39(1) (a) of the CGST Rules merely refers to ‘input tax credit available for distribution’ and cannot be interpreted as mandating distribution immediately upon issuance of the invoice without satisfaction of statutory conditions. The Court therefore interpreted the expression ‘input tax credit available for distribution in a month’ to mean credit that becomes available after compliance with the requirements of Section 16(2) and directed that the show cause notices alleging delayed distribution be examined and adjudicated in light of this interpretation.
List of Cases Cited
- ALD Automotive (P.) Ltd. v. Commercial Tax Officer — 2018 (364) E.L.T. 3 (S.C.) — Followed [Paras 6.4, 24.1, 24.3, 24.4]
- India Agencies v. CCT — (2005) 2 SCC 129 — Referred [Para 24.2]
- Jayam and Co. v. Asstt. Commissioner — 2018 (19) G.S.T.L. 3 (S.C.) — Referred [Para 6.2]
- Sales Tax Officer v. K.I. Abraham — AIR 1967 SC 1823 — Referred [Para 5.2]
- Union of India v. V.K.C. Footsteps India Pvt Ltd — 2021 (52) G.S.T.L. 513 (S.C.) — Followed [Paras 6.3, 18, 22]
- Vivek Narayan Sharma v. Union of India — [2023] 146 taxmann.com 36 (SC) — Followed [Para 40]
List of Notifications Cited
- Notification No. 12/2024 – Central Tax, dated 10-7-2024
