Input Tax Credit Restored for FY 2018-19 as Delayed Returns Met

Input Tax Credit Restored for FY 2018-19 as Delayed Returns Met the Extended Statutory Cut-Off Under Section 16(5)

Issue

Whether the tax authorities were justified in denying Input Tax Credit (ITC) to the petitioner for the period April 2018 to March 2019 on the grounds of delayed return filing, or whether the denial was overridden by the retrospective statutory relaxation introduced under Section 16(5) of the GST Act.

Facts

Tax Period: April 2018 to March 2019 (Financial Year 2018-19).
The Disallowance: The Proper Officer issued an assessment order (Ext.P1) completely denying the petitioner’s ITC claim for the relevant financial year, citing that the underlying GSTR-3B returns were filed past the standard statutory deadlines.
Filing Dates: The official order itself recorded that the petitioner’s returns for the period were filed on October 31, 2019, and February 20, 2022.
The Legal Shift: The petitioner challenged the disallowance in a writ petition, claiming the protective benefit of Section 16(5), a newly inserted statutory amendment designed to retrospectively relax the time limits for claiming ITC for the initial years of GST implementation.

Decision

Entitled to Section 16(5) Benefit: The High Court held that the newly introduced statutory scheme under Section 16(5) permits ITC claims for FY 2018-19, provided the relevant returns were furnished on or before the relaxed statutory cut-off date of November 30, 2021 (with certain extensions applying to specific blocks).
Factual Compliance Met: Based on the dates captured in the department’s own order (Ext.P1), the Court found that the petitioner had furnished the returns within the legally acceptable timelines contemplated under the relaxed scheme.
Order Quashed & Remanded: The impugned order (Ext.P1) denying the ITC was quashed. The High Court remanded the matter back to the tax authorities with a directive to grant the ITC benefit to the petitioner under Section 16(5), provided they fulfill all other substantive statutory conditions.

Key Takeaways

Retrospective Relief Overrides Deadlines: Section 16(5) is a beneficial legislative insertion intended to mitigate severe hardships faced by taxpayers during the initial, turbulent years of GST implementation by extending the time limits to claim ITC for FY 2017-18 and FY 2018-19.
Admissions in Departmental Orders: If the dates of filing recorded in the tax department’s own show-cause notices or orders place the assessee within the relaxed window provided by subsequent amendments, the department cannot deny the corresponding statutory benefit.
Conditional Remand: While procedural delays regarding time limits are wiped clean by specific legislative amendments, the field officers still retain the right on remand to verify if the taxpayer satisfies other basic criteria for claiming ITC, such as possessing valid invoices and actual receipt of goods/services.

HIGH COURT OF KERALA

Oyster Auto Body

State Tax Officer

ZIYAD RAHMAN A.A., J.

WP(C) NO. 18712 OF 2026

JUNE 2, 2026

Aji V. Dev, S. Sajeevan, Jash C. James and Smt.Vandana Bhat T.V., Advs. for the Appellant. Arun Ajay Shankar, Gp for the Respondent.

JUDGMENT

1. The petitioner is a registered taxpayer under the provisions of the Central Goods & Services Tax Act, 2017 & Kerala State Goods & Services Tax Act, 2017 (for short “CGST and KSGST Act”). The challenge in this writ petition is against Ext.P1 order passed under Section 73 of the CGST Act, by which the input tax credit claimed by the petitioner, pertaining to the months of April, 2018 to March, 2019 was declined, on the reason that, the petitioner failed to submit the returns within the period stipulated in Section 16 (4) of the CGST Act.

2. Ext.P1 order is challenged by the petitioner by placing reliance upon Section 16 (5) of the CGST Act, which was subsequently introduced, where it is provided that, in cases where, the taxpayer furnishes the return within the cut off date contemplated therein, which is 30.11.2021, such taxpayer would be entitled to claim the input tax credit. In this case, going through Ext.P1 order itself, it is clear that the petitioner had submitted the returns, pertaining to the relevant months, on 31.10.2019 and 20.02.2022. Thus, it is evident that all the returns were submitted within the statutory period contemplated under Section 16 (5) of the CGST Act, and hence, the petitioner is entitled to claim the benefit of the same. In such circumstances, the matter requires reconsideration.

Accordingly, this writ petition is disposed of quashing Ext.P1 order, with a direction to the 1^st respondent to reconsider the matter, by granting the benefit of input tax credit under Section 16 (5) of the CGST Act to the petitioner, if the petitioner is otherwise entitled to.