Section 16(5) Overrides Deadlines: ITC for 2017-21 is Valid if Filed by Nov 2021.

The Dispute: The Section 16(4) “Hard Deadline”

The Conflict: For FY 2018-19, the petitioner had claimed ITC in their returns.

The Original Rejection: The Revenue issued a Show Cause Notice (SCN) and a subsequent Order-in-Original (OIO) denying the credit. They cited Section 16(4), which mandated that ITC for a financial year must be claimed by the September/November of the following year. Since the petitioner filed late, the credit was declared “time-barred.”
The Legislative Shift: While the writ was pending, the government inserted Section 16(5) into the CGST Act (via the Finance Act, 2024/2025) specifically to address the hardships of the initial years of GST.

The Judicial Verdict: The Supremacy of Section 16(5)

The Court ruled in favour of the Assessee, setting aside the demand, interest, and penalty based on the following:

1. The “Notwithstanding” Clause

The Court highlighted that Section 16(5) begins with a “non-obstante” clause (“Notwithstanding anything contained in sub-section (4)…”). This means that the new rule overrides the old deadline for the specific years mentioned.

2. The New “Amnesty” Deadline

As per the amendment, for the “transitional years” of GST (FY 2017-18, 2018-19, 2019-20, and 2020-21), the deadline to avail ITC has been retrospectively extended.

The Rule: ITC for these years is now deemed valid if it was taken in any return (GSTR-3B) filed up to 30th November 2021.

3. Automatic Relief

Since the petitioner’s claim for FY 2018-19 fell within this newly extended window, the Court held that the entire basis of the Department’s original demand had evaporated. There was no longer a need to debate “reasonable cause” for the delay; the statute itself now protected the credit.

Strategic Takeaways for Taxpayers in 2026

Reopen Past Rejections: If you have paid tax demands or had ITC blocked for the periods 2017-18 to 2020-21 solely on the grounds of “Section 16(4) delay,” you are now entitled to relief. If your case is pending in appeal or writ, this judgment is your “silver bullet.”
Interest and Penalty Refund: Because the Court set aside the OIO “sustaining demand, interest, and penalty,” any amounts already paid under protest for these specific cases should be eligible for a refund/adjustment.
The November 2021 Benchmark: Carefully check your filing dates. The protection of Section 16(5) only applies if the return in which you claimed the ITC was filed on or before 30th November 2021.
Procedural Clean-up: Ensure your jurisdictional officer “drops” any active SCNs citing Section 16(4) for these specific years by filing a formal representation referencing this High Court ruling and the insertion of Section 16(5).

HIGH COURT OF GAUHATI

Saurabh Agarwalla

Union of India^*

ANJAN MONI KALITA, J.

WP(C) No. 1733 of 2026

APRIL 6, 2026

R.S. Mishra, Ms. B. Sarma and Ms. M. Dey, Advs. for the Petitioner.

ORDER

1. Heard Mr. R. S. Mishra, learned counsel for the petitioner and Ms. P. Uppadhyaya, learned counsel appearing on behalf of Mr. S. C. Kayal, learned DSGI for the respondents/CGST.

2. The petitioner, in the present case, has challenged the Demand-cum-Show Cause Notice dated 20.10.2023, issued by respondent No. 4, alleging that during the financial year 2018-19, the petitioner has availed Input Tax Credit (hereinafter referred to as ‘ITC’) amounting to Rs. 2,38,928/-, which was in violation of Section 16(4) of the Central Goods and Services Tax Act (hereinafter referred to as ‘CGST’), 2017, as the ITC was availed beyond the time limit prescribed by Section 16(4) of the CGST Act. Pursuant to the issuance of the said Show Cause Notice, Respondent No. 4 passed the Order-in-Original dated 07.02.2024, confirming the demand of Rs. 2,49,142/- along with interest of Rs. 553/- and a penalty of Rs. 24,914/-.

3. It is the case of the petitioner that subsequent to the passing of the aforementioned Order-in-Original dated 07.02.2024, Subsections 5 and 6 were inserted in Section 16, extending the time limit for availing ITC for the financial years 2017-18, 2018-19, and 2019-20 until 30th November 2021. The petitioner is required to pay a demand of Rs. 2,38,928/-.

4. It may be relevant to refer to Section 16, both pre-amendment and postamendment, of the CGST Act, 2017, which is extracted hereinbelow:

“16(4). A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the [thirtieth day of November] following the end of financial year to which such invoice or [xxx] debit note pertains or furnishing of the relevant annual return, whichever is earlier: [PROVIDED that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under Section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-Section (1) of Section 37 till the due date for furnishing the details under sub-section (1) of the said section for the month of March, 2019.]”

5. The provisions of Sections 5 and 6, as incorporated vide the said amendment, being relevant, is extracted hereinbelow:

“(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under Section 39 which is filed upto the thirtieth day of November, 2021.

(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or Court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under Section 39,-

(i)

filed upto thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or

(ii)

for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancelation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration.”

6. It is seen from the aforementioned amendment that notwithstanding anything contained in Section 16(4) CGST Act, 2017, in respect of any invoice or debit note for the supply of goods or services, or both, pertaining to the financial years 2017-18, 2018-19, 2019-20, and 2020-21, the registered person shall be entitled to take ITC in any return under Section 39, which is filed up to the 30th day of November, 2021.

7. In view of the aforementioned amendment, it is clear that the challenge made in the present proceedings before this Court is no longer required to be addressed. Accordingly, considering the amendments, it is evident that the petitioner is entitled to avail the benefit of ITC for the relevant period.

8. Ms. P. Uppadhyaya, learned counsel appearing for the respondents, submits that the instant petition can be disposed of by directing the petitioner to pay the amount of Rs. 10,214/- which is the excess utilized amount and Rs. 553/- which is the interest on the case amount.

9. In response to the submissions made by the learned counsel for the respondents, the learned counsel for the petitioner submits that he does not have any objection to the payment of the aforesaid two amounts. Therefore, the instant petition is disposed of with a direction to the petitioner to pay the amount of Rs. 10,214/- (excess utilized amount) and Rs. 553/- (interest on the case amount) within a period of 30 days from the receipt of the certified copy of this order.

10. In view of the aforesaid direction, the Order-in-Original dated 07.02.2024 is set aside.

11. With the above directions and observations, the instant writ petition stands disposed of.