Section 16(5) Retrospectively Cures Belated ITC Claims for FY 2017-18 to 2020-21.

The Dispute: The “Dead” Credit revived by Law

The Conflict: For the period April 2018 to March 2019, the Petitioner had claimed ITC after the deadline prescribed under Section 16(4). The Department issued a Show-Cause Notice (SCN) and passed an order demanding the reversal of this credit plus interest, simply because it was “late.”

The Petitioner’s Stance: Even though they didn’t reply to the original SCN, they argued that the law has changed fundamentally. The Finance (No. 2) Act, 2024 introduced a “cure” for this exact problem.

The Legal Breakthrough: Sections 16(5) and 16(6)

The Court highlighted that the legislative landscape for ITC has been transformed by the retrospective insertion of two new sub-sections:

Section 16(5): This section specifically allows for the availment of ITC for the Financial Years 2017-18, 2018-19, 2019-20, and 2020-21, even if the credit was claimed after the deadline, provided the return was filed by 30th November 2021.
Section 16(6): This provides a mechanism for cases where the credit was already disallowed but is now “cured” by Section 16(5), ensuring that taxpayers can get their money back or have their demands quashed.

The Judicial Verdict

The High Court ruled in favour of the Assessee, establishing these vital principles:

Statutory Eclipse: The original demand, which was based on the “time bar” of Section 16(4), is now eclipsed (overridden) by the retrospective law.
No Reply Needed for Jurisdictional Truth: Even though the Petitioner failed to reply to the SCN, their legal entitlement to the credit does not vanish. The law itself has changed in their favour from 01.07.2017.
Remand for Verification: The Court sent the matter back to the Department. The Department’s only job now is to verify:
- Whether the supplies were actually received.
- Whether the requisite documents (invoices) exist.
- Whether other eligibility criteria (Section 16(2)) are met.

Key Takeaways for Taxpayers

Old Demands are Nullified: If you have an outstanding tax demand for FY 17-18, 18-19, 19-20, or 20-21 solely based on delayed ITC, you should immediately move to have the order quashed in light of this judgment.
The 30 Nov 2021 Cut-off: Ensure that the GSTR-3B return through which you claimed the credit was filed on or before 30th November 2021. This is the hard deadline for the “retrospective cure” to apply.
Documentation is Paramount: While the “time-limit” hurdle is removed, you must still prove you are eligible for the credit. Keep your invoices, transport documents (e-way bills), and payment proofs ready for the fresh verification.
Section 155 Burden: Remember that under Section 155, the burden of proving the eligibility for ITC still lies with the taxpayer. The court has cleared the legal path, but you must still provide the factual evidence.

HIGH COURT OF MADRAS

Om Sakthi Maligai

Superintendent of GST and Central Excise, Tiruvarur^*

C. Saravanan, J.

W.P. No. 9968 of 2026
W.M.P. No. 10792 of 2026

MARCH 12, 2026

Ms. R. Dhanalakshmi for the Petitioner. Mrs. Revathi Manivannan, Senior Standing Counsel for the Respondent.

ORDER

1. Mrs.Revathi Manivannan, learned Senior Standing Counsel takes notice for the Respondent.

2. This Writ Petition is being disposed of at the time of admission with the consent of the learned counsel for the Petitioner and the learned Senior Standing Counsel for the Respondent.

3. The Petitioner is before this Court against the impugned Order bearing No.05/2024-GST TVR dated 26.04.2024 whereby the proposal in Show Cause Notice dated 25.12.2023 issued for the Tax Period April 2018-March 2019 has been confirmed. In absence of a reply to the Show Cause Notice, the demand has been confirmed on account of belated availing of Input Tax Credit under Section 16(4) of the respective GST Enactments which now stands condoned by virtue of insertion of Section 16(5) and Section 16(6) to the respective GST Enactments inserted by Finance (No.2) Act, 2024 (15 of 2024) dated 16.08.2024 with effect from 27.09.2024 vide SO 4253(E) with retrospective effect from 01.07.2017. By virtue of statutory intervention, the credit that was availed belatedly has been cured subject to certain condition.

4. Even if the Petitioner has not complied with the above condition i.e., filing of reply to the Show Cause Notice, the Petitioner is entitled to avail Input Tax Credit subject to the Petitioner filing requisite documents to establish that the Petitioner had indeed received interest on which Input Tax Credit was availed belatedly.

5. Considering the same, this case is remitted back to the Respondent to pass a fresh order on merits and in accordance with law as expeditiously as possible, preferably, within a period of three (3) months from the date of receipt of a copy of this order. Subject to the Petitioner complying the above stipulation, the attachment of the bank account of the Petitioner shall also stand automatically vacated.

6. This Writ Petition stands disposed of with the above observations. No costs. Connected Writ Miscellaneous Petition is closed.