In view of Sections 16(5) and 16(6), demand for belated ITC

In view of Sections 16(5) and 16(6), demand for belated ITC was set aside and matter remanded.

Issue

Whether an assessment order confirming a demand for belated availing of Input Tax Credit (ITC) under Section 16(4) should be set aside and remanded for fresh adjudication when the delay stands retrospectively condoned under newly inserted Sections 16(5) and 16(6) of the CGST/TNGST Act.

Facts

An assessment order was passed against the petitioner, confirming a demand solely due to the belated availing of ITC under Section 16(4).
The impugned order was preceded by a show cause notice (SCN), which had been confirmed in the absence of a reply from the petitioner.
Subsequently, Section 16(5) and Section 16(6) were inserted into the CGST/TNGST Act with retrospective effect, effectively condoning the delay in claiming ITC under Section 16(4).
The Court had previously passed an order on 24-03-2026 regarding the petition.
The petitioner mentioned the matter before the Court, stating she was unaware of the orders/amendments passed in the context of Section 16(4).
The petitioner requested that the matter be remitted back for fresh consideration without requiring a pre-deposit, as she was otherwise entitled to the ITC subject to proving receipt of goods/services and compliance with other statutory conditions.

Decision

The Court modified the relevant paragraphs of its earlier order dated 24-03-2026, holding that even though the petitioner had failed to reply to the SCN initially, she was entitled to avail the ITC subject to filing the requisite supporting documents.
The impugned order was set aside and the matter was remitted back to the authority to pass a fresh order within three months.
The Court directed that, subject to the petitioner’s compliance with submitting the necessary documentation, the attachment on the petitioner’s bank account shall automatically stand vacated.

Key Takeaways

Retrospective Relief under Sections 16(5) & 16(6): Demands created solely on account of delayed ITC claims under Section 16(4) are remediable due to the retrospective operation of Sections 16(5) and 16(6).
Remand for Procedural Verification: Failure to respond to an initial SCN does not preclude an assessee from claiming valid ITC if statutory conditions are otherwise satisfied; procedural defaults can be cured by remanding the matter for fresh verification of documents.
Vacation of Coercive Measures: Bank account attachments and other recovery actions are liable to be automatically lifted upon remanding the matter and submitting the requisite compliance documentation.

HIGH COURT OF MADRAS

24 HRS Productions

Superintendent of GST and Central Excise

C. Saravanan, J.

WP No. 11123 of 2026

JUNE 22, 2026

Ms. S. Nivithra for the Petitioner. R.P. Pragadeesh, Sr. Standing Counsel for the Respondent.

ORDER

1. This Case is listed under the caption, ” for being mentioned” after the Order was passed by this Court disposing of the Writ Petition recording the submission of the learned counsel for the Petitioner on 24.03.2026.

2. The learned counsel for the Petitioner submits that she was unaware of the orders being passed in the context of Section 16(4) of the respective GST Enactment. He further submits that the matter may be remitted to back without any condition for pre deposit as the Petitioner’s otherwise entitled to Input Tax Credit except for proving the receipt and compliance of other procedure under Section 60.

3. The learned counsel for the Respondent submits that appropriate orders may be passed in the light of the submissions of the learned counsel for Petitioner balancing the interest of the Petitioner and also the Revenue.

4. Having considered the submissions made by the learned counsel for the Petitioner and the learned counsel for the Respondent and taking note of the facts of the case, I am inclined to modify the order passed on 24.03.2026.

5. Paragraph No.3, 4 5 and 6 of the Order dated 24.03.2026 shall be modified as follows:

“3) In this Writ Petition, the Petitioner has challenged the impugned Order dated 29.04.2024, which was preceded by a Show Cause Notice No.62/2023-GST-(SUPDT) dated 29.12.2023 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 ifthe 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 ofthree (3) months from the date of receipt ofa 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.”

6. Paragraph Nos.7 to 12 of the order dated 24.03.2026 shall stand omitted and the other aspects of the Order dated 24.03.2026 shall remain unaltered.

7. Registry is directed to carry out the necessary corrections and issue fresh order copies to the parties.