ISD distribution timelines Upheld

The Madras High Court considered a constitutional challenge to Rule 39(1)(a) of the CGST Rules which requires Input Service Distributors to distribute input tax credit in the same month in which the underlying invoice is received. Reliance Jio Infocomm Limited argued that such a requirement was arbitrary, impossible to comply with, and beyond the scope of the parent statute prior to the amendment of Section 20 of the CGST Act in April 2025. The Court rejected these contentions and held that input tax credit is a statutory benefit that can be regulated through procedural conditions prescribed by law. The Court further held that the rule prescribing same-month distribution was consistent with the statutory scheme governing ITC and did not violate constitutional guarantees. Consequently, the writ petitions challenging the rule and the related show cause notices were dismissed.