Supreme Court Upholds Constitutional Validity of Section 16(2)(c) of the CGST Act in Bhandari Scrap Traders — Rajasthan HC Dismisses Pending Challenges, Grants Liberty to File Statutory Appeal

The Rajasthan High Court has dismissed a batch of writ petitions challenging the constitutional validity of Section 16(2)(c) of the CGST Act, 2017, on the ground that the Hon’ble Supreme Court has, by its order dated 24.07.2026 in Bhandari Scrap Traders v. Union of India & Ors., already upheld the constitutional validity of the provision. The ruling, by Chief Justice Sanjay K. Agrawal and Justice Munnuri Laxman in D.B. Civil Writ Petition No. 7881/2024 and companion petitions (Durga Agencies and others, decided 09.09.2026), brings closure to a long-standing line of challenges raised across High Courts against the condition that ITC is available to a recipient only if the tax charged by the supplier has been actually paid to the Government.

The petitioners had contended that Section 16(2)(c) was violative of Articles 14 and 19 of the Constitution of India, and had also challenged an intimation issued under Section 74 read with Rule 142 of the Rajasthan GST Rules. The Additional Solicitor General, appearing for the Union of India, informed the court that the Supreme Court had conclusively adjudicated the issue in Bhandari Scrap Traders, declaring Section 16(2)(c) constitutionally valid, and that the writ petitions were therefore squarely covered and could not be entertained.

The court noted that the substantive constitutional challenge had been settled by the Supreme Court and declined to entertain the petitions. As regards the demand notices which had already been adjudicated and final orders passed, the court observed that the remedy lay in statutory appeal under Section 107 of the Rajasthan/CGST Act before the Commissioner (Appeals). Liberty was granted to file such appeals, and the Senior Counsel for the respondent fairly conceded that the question of limitation would not be raised if the appeal was preferred within 30 days. The Appellate Authority was directed to decide the appeals on merits without going into the question of limitation.

- 2026-juristway.com-1245-HC(Rajasthan)-GST  |  High Court of Rajasthan  |  D.B. Civil Writ Petition No. 7881/2024 and batch  |  09.09.2026