ITC Cannot Be Denied Under General Time Limits If Filed Within Special Non-Obstante Cut-off

By | July 3, 2026
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ITC Cannot Be Denied Under General Time Limits If Filed Within Special Non-Obstante Cut-off

Issue

Whether Input Tax Credit (ITC) can be legally denied under the general time limits of Section 16(4) of the CGST/SGST Act if the taxpayer filed their returns within the specific timeline provided by a special non-obstante credit provision.

Facts

  • The petitioner is a registered taxpayer under the CGST/SGST Acts who claimed Input Tax Credit for the financial year 2018–19.

  • The adjudicating authority passed an assessment order denying the ITC, citing that the claim was barred by the limitation period prescribed under the general ITC provisions.

  • The department’s order recorded that the petitioner submitted their tax returns for April 2018 and March 2019 on 15 February 2021 and 27 February 2021 respectively.

  • The Revenue Department founded its denial entirely on the basis that these returns were filed beyond the standard statutory timeline prescribed for availing ITC.

  • The petitioner challenged this denial through a writ petition, asserting that their claim was governed by a special non-obstante credit provision with a specific cut-off extension that overrode the general rule.

Decision

  • Override of General Limits: The High Court observed that the petitioner’s returns were filed within the extended cut-off period explicitly envisaged under the special non-obstante credit provision.

  • General Timelines Rendered Ineffective: The Court held that since the non-obstante provision explicitly overrides the general time limits, the standard restrictive timeline loses its legal significance once a return is filed within the special cut-off.

  • Denial Unsustainable: The assessment order founded solely on the general time limit was declared unsustainable, warranting judicial interference under writ jurisdiction.

  • Impugned Order Set Aside: The Court set aside the denial and remanded the matter back to the tax authorities for fresh consideration.

  • Scope of Remand: The department was directed to reconsider the matter and grant the ITC benefit under the special non-obstante provision, provided the petitioner satisfies all other eligibility criteria.

Key Takeaways

  • Supremacy of Non-Obstante Clauses: A non-obstante clause creates an absolute statutory override. When a special provision sets a unique deadline, the regular, restrictive deadlines under Section 16(4) cannot be applied to defeat it.

  • Conditional Relook on Remand: While the court cleared the hurdle of limitation, it did not grant automatic relief; the tax authorities retain the power to verify whether the taxpayer is “otherwise eligible” under other substantive parameters of the law.

HIGH COURT OF KERALA
Deepam Palm Dish
v.
State Tax Officer
ZIYAD RAHMAN A.A., J.
WP(C) NO. 20408 OF 2026
JUNE  16, 2026
Smtg.Mini, P.J. Anil Kumar, Satyajith K. Warrier, P.S. Sree Prasad, Advs. and A. Kumar, Sr. Adv. for the Petitioner. Shaij Raj T.K., GP for the Respondent.
JUDGMENT
1. The petitioner is a registered tax payer under the provisions of the CGST and SGST Act. This writ petition is submitted by the petitioner challenging Ext.P4 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 and 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. The case of the petitioner is that, it is entitled to get the benefit of input tax credit in the light of Section 16(5) of the CGST Act, as the petitioner had already submitted the return before the cut off date under the said provision, which is 30.11.2021.
3. After hearing the learned counsel for the petitioner and the learned Government Pleader, I find that there is some force in the said submission. This is particularly because, in the order impugned in this case itself, it is clearly mentioned that the returns for the months of April, 2018 and March, 2019 were submitted by the petitioner on 15.02.2021 and 27.02.2021 respectively. Thus, it is evident that the returns were submitted within the cut off date contemplated under Section 16(5) of the Act and hence the petitioner is entitled to the benefit. This is particularly because, Section 16(5) there is a non-obstante clause, as regards Section 16(4) and therefore, once the tax payer submits the return within the cut off date contemplated under Section 16(5) of the Act, the time line in Section 16(4) loses its significance.
4. In such circumstances, this writ petition is disposed of quashing Ext.P4 with a direction to the 1st respondent to reconsider the matter and grant the benefits of Section 16(5) of the CGST Act, if it is otherwise entitled.