Section 16(5) Statutory Right to Rectify Return for ITC Cannot

Section 16(5) Statutory Right to Rectify Return for ITC Cannot Be Restricted by Circular’s Time Limit

Issue

Whether an application to rectify a GST return under Section 39 to avail Input Tax Credit (ITC) under Section 16(5) can be rejected based on a six-month time limit imposed by departmental circulars when the statute itself prescribes no such time restriction.

Facts

Return Rectification Filed: The petitioner-assessee sought to avail Input Tax Credit (ITC) by filing an application to rectify a return filed under Section 39 within the statutory cut-off.
Application Rejection: The jurisdictional authority rejected the rectification application citing a six-month window prescribed under departmental circulars issued in 2024.
Writ Challenge: The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the rejection, contending that executive circulars cannot override statutory provisions.
Revenue’s Stand: The Revenue relied on administrative circulars issued under Section 168 to enforce the six-month time limit for processing return rectifications.

Decision

Statutory Primacy: Held that Section 16(5) confers a substantive right to apply for return rectification to avail ITC, and the statute contains no explicit time limit for such applications.
Circulars Directory: Held that executive circulars issued under Section 168 cannot override statutory rights; the six-month cap in the 2024 circulars is directory and not mandatory.
Scope of Article 226: Held that in the absence of a statutory limitation period, the High Court under Article 226 can extend time based on facts unless the delay is exceptional or unreasonable.
Relief: Set aside the rejection order and remanded the matter to the jurisdictional authority to reconsider the rectification application on merits in accordance with law.

Key Takeaways

Statute Overrides Circulars: Departmental circulars cannot restrict, curtail, or impose time limits on substantive rights granted under the CGST Act unless expressly provided by the statute.
Section 16(5) Overcomes Administrative Caps: Where a taxpayer satisfies the substantive conditions for claiming ITC under Section 16(5), procedural circulars cannot act as a complete bar to rectifying returns.
Directory Nature of Administrative Deadlines: Timeframes set by administrative instructions for filing applications are directory, allowing constitutional courts under Article 226 to grant relief in deserving cases.

HIGH COURT OF CALCUTTA

Umen Chandra Roy

Union of India

Aniruddha Roy, J.

WPA No. 1360 OF 2026

AUGUST 17, 2026

Dhiraj Lakhotia, Ms. Radhika Agarwal, Ms. Khusi Kundu, Ms. Nikita Kundu, Satyajit Paul, Ms. Neha Lama and Ms. Parmita Chowdhury, Advs. for the Petitioner. Dilip Kumar Agarwal and Biswaraj Agarwal, Advs. for the Respondent.

ORDER

Aniruddha Roy, J. – Mr. Dhiraj Lakhotia, learned Advocate appears for the petitioner.

2. Mr. Dilip Kumar Agarwal, learned advocate with Mr. Biswaraj Agarwal, learned Advocate appears for the respondent/Union of India.

3. The petitioner wants to avail of the Input Tax Credit Facility in respect of a particular return under Section 39 of Central Goods and Services Tax Act, 2017 (hereinafter, 2017 Act) which had been filed up to November 30, 2021 which is within the statutory cut off date fixed under Sub-Section 5 to Section 16 of 2017 Act. The petitioner had filed a rectification application on January 12, 2026 which was supposed to be filed within six weeks from the date of communication dated October 15, 2024, annexure p-6 at page 53 to the writ petition.

4. Since, the petitioner did not file the application within the said stipulated period which had a retrospective effect under the said circular/notification dated April 8, 2024 at page 49 to the writ petition read with the circular dated October 15, 2024 at page 53 to the writ petition, the rectification application of the petitioner was rejected by the revenue authority by its impugned order dated April 8, 2026 annexure p-10 at page 66 to the writ petition.

5. Mr. Dilip Kumar Agarwal, learned Advocate appearing for the petitioner submits that, the time may be extended though by virtue of the said notification dated October 15, 2024 time has been fixed for preferring a rectification application for six months from the date of the said notification but since Sub-Section 5 to Section 16 of the 2007 Act does not prescribe for any time limit, the time fixed under the said notification/circular can be extended.

6. Mr. Dilip Kumar Agarwal, learned Advocate appearing for the revenue submits that, the order in original dated March 6, 2024 at page 42 to the writ petition was served upon the petitioner on the same day by post and hence has denied the statements made in 2(iii) to (vi) of the writ petition.

7. Hence, the order of rejection of the rectification application dated April 8, 2026 is just and lawful and same should not be interfered with.

8. After considering the rival submissions of the parties and on perusal of the materials on record, it appears to this Court that, Sub-Section 5 to Section 16 of 2017 Act gives a substantive right to assessee to prefer the rectification application to avail the Input Tax Credit. Such provision does not specify any time within which an assessee has to apply to avail such facility.

9. Through the said circular/notification dated April 8, 2024 at page 49 read with the circular dated October 15, 2024 at page 53 to the writ petition though the department with a prospective effect has limited the period for six months from the date of issuance of the notification for an assessee to avail Input Tax Credit Facility by filing a necessary rectification application but in absence of any time frame having been mentioned under Sub-Section 5 to Section 16 of the 2017 Act which is the substantive provision, the time frame mentioned by the department under the said two notifications dated April 8, 2024 read with October 15, 2024 being the notifications issued in exercise of executive power cannot prevail upon or override a substantive provision under the statute. These notifications will give guideline and are directory in nature and not mandatory.

10. In view of the forgoing reasons and discussions depending upon the fact situation, which shall vary from case to case, this Court by exercising its power under Section 226 of the Constitution of India can extend the period, unless an exceptional delay is there.

11. In view of the above, the order impugned dated April 8, 2026 annexure p-10 at page 66 to the writ petition rejecting the rectification application, submitted by the petitioner, stands set aside and quashed.

12. In view of the above, the appropriate jurisdictional authority shall revisit the rectification application which is already on record, strictly in accordance with law and shall dispose it of by passing a reasoned order positively within eight weeks from the date of communication of this order.

13. It is made clear that, this court have not expressed any opinion on merit of the rectification application and the jurisdictional authority shall be free to proceed with it and dispose of it on its own merits in accordance with law.

14. This order, in any event, shall not create any right of equity in favour of the petitioner, in the event, the petitioner is found not entitled to get relief in the rectification application strictly in accordance with law.

15. Since affidavits are not called for, the allegations made in the writ petition are deemed not to have been admitted by the respondents.

16. The writ petition WPA 1360 of 2026 stands disposed of, without any order as to costs.

17. Parties shall act on the basis of the server copy of this judgment duly downloaded from the official website of this Court.