Input Tax Credit Cannot Be Denied Under Section 16(4)

Input Tax Credit Cannot Be Denied Under Section 16(4) When Returns Are Furnished Before Section 16(5) Cut-Off Date

Issue

Whether denial of Input Tax Credit (ITC) under Section 16(4) for delayed filing of returns for FY 2019-20 is sustainable when the returns were furnished prior to the extended cut-off date of November 30, 2021 prescribed under Section 16(5) of the CGST/KGST Act.

Facts

The petitioner was a registered taxable person under the CGST Act and KGST Act.
For the financial year 2019-20 (April 2019 to March 2020), the petitioner furnished the relevant GST returns on December 28, 2020, and April 13, 2021.
The Assessing Officer passed an order-in-original noting belated tax payment along with interest, and denied the ITC claimed on the grounds that the returns were filed beyond the due date specified under Section 16(4).
The petitioner challenged the denial of ITC by invoking Section 16(5), which extended the cut-off date to November 30, 2021, while not disputing the interest liability under Section 50.

Decision

Decided in favour of the assessee.
The court held that Section 16(5) permits ITC claims for returns furnished on or before November 30, 2021. Since the petitioner filed the returns on December 28, 2020, and April 13, 2021, the filings fell well within the statutory cut-off window.
The order-in-original was quashed to the extent of the ITC denial, with directions to the authority to reconsider and grant ITC under Section 16(5) if the petitioner is otherwise entitled.

Key Takeaways

Overriding Effect of Section 16(5): Section 16(5) provides statutory relief by extending the time limit to claim ITC for past periods, provided the returns were filed on or before November 30, 2021.
Inapplicability of Section 16(4) Restrictions: Strict deadlines under Section 16(4) cannot be invoked to disallow ITC if the return filing satisfies the relaxed deadline established under Section 16(5).
Interest Compliance vs. ITC Eligibility: Payment of statutory interest under Section 50 for delayed return filing does not impair or restrict the taxpayer’s substantive right to claim ITC within the extended timeframe.

HIGH COURT OF KERALA

A.R. Thaha Muhammed

Assistant State Tax Officer

ZIYAD RAHMAN A.A., J.

WP(C) NO. 29142 OF 2026

AUGUST 20, 2026

Smt. Vandana Bhat T.V., Aji V. Dev, H. Abdul Lathief, Alan Priyadarshi Dev and S. Sajeevan, Advs. for the Petitioner. Smt. Sindhu Santhalingam, Sr. G.P. for the Respondent.

JUDGMENT

1. The petitioner is a registered taxpayer under the provisions of the CGST/KGST Act. The grievance raised by the petitioner is against Ext.P1 Order-in-Original passed in respect of the assessment year 2019-2020. In Ext.P1 assessment order, two discrepancies were noticed by the assessing authority. The first one was that the taxpayer had paid tax on certain outward supplies belatedly and, therefore, interest under Section 50 was liable to be paid. The second defect was that the petitioner submitted the returns pertaining to the months from April 2019 to March 2020 after the date specified in Section 16(4) of the CGST Act and, therefore, the petitioner was not entitled to claim the input tax credit in respect of the said period.

2. I have heard the learned counsel for the petitioner and the learned Government Pleader for the respondents.

3. As regards the first defect, namely, the interest under Section 50, it is submitted by the learned counsel for the petitioner that the petitioner does not have any dispute and is prepared to make the payment. The challenge raised by the petitioner is against the denial of input tax credit for violating Section 16(4) of the CGST Act. This contention is raised mainly by placing reliance upon Section 16(5) of the CGST Act, which provides that, in case the taxpayer furnishes the return within the cut-off date contemplated under Section 16(5), which is 30.11.2021, such taxpayer would be entitled to claim the input tax credit. It is discernible from Ext.P2 series of returns that, the petitioner had submitted all the returns on 28.12.2020 and 13.04.2021. Thus, it is evident that all the returns were submitted by the petitioner within the time stipulated in Section 16(5) and, therefore, the petitioner is entitled to claim the input tax credit. In such circumstances, an interference is required.

Accordingly, this writ petition is disposed of by quashing Ext.P1 to the extent it declines the input tax credit under Section 16(4) of the CGST Act, with a direction to the assessing officer to reconsider the matter and grant the benefit of input tax credit on the strength of Section 16(5) of the CGST Act, if the petitioner is otherwise entitled.