Input Tax Credit Allowed for AY 2019-20 Due to Amendment in Section 16(5) of GST Act

Issue: Whether the disallowance of Input Tax Credit (ITC) for AY 2019-20 is valid considering the amendment to Section 16 of the GST Act, which inserted sub-section (5) regarding the time limit for claiming ITC.

Facts:

The assessee challenged an order disallowing ITC claims for AY 2019-20.
The disallowance was solely based on the ground that the claims were filed beyond the time limit prescribed under Section 16(4) of the GST Acts.
The assessee argued that the amendment to Section 16, inserting sub-section (5), allowed for ITC claims pertaining to FY 2017-18 to 2020-21 to be made up to November 30, 2021.

Decision:

The court acknowledged the amendment to Section 16 and the insertion of sub-section (5).
It held that in light of this amendment, the impugned order disallowing ITC for AY 2019-20 was to be set aside.
The court directed the assessing/adjudicating authority to reassess the assessee’s ITC claim, taking into account the amended provision of Section 16(5).

Key Takeaway:

This case highlights the impact of legislative amendments on tax assessments. The court recognized the retrospective effect of the amendment to Section 16(5) of the GST Act, allowing taxpayers to claim ITC for the specified financial years up to November 30, 2021, even if the claims were filed beyond the original time limit. This decision provides relief to taxpayers who may have missed the initial deadline for claiming ITC due to the amendment.

HIGH COURT OF MADRAS

Saritha Impex & Marketing (P.) Ltd.

Superintendent of CGST & Central Excise

Mohammed Shaffiq, J.

W.P.No.39848 of 2024
W.M.P.Nos.43179 and 43180 of 2024

JANUARY 3, 2025

Ms. C. Rekhakumari for the Petitioner. K.S. Ramaswamy, Sr. Standing Counsel for the Respondent.

ORDER

1. The present writ petition is filed challenging the impugned order passed by the respondent dated 28.08.2024 relating to the assessment year 2019-20 on the premise that the Input Tax Credit has been disallowed only on the ground that the claims have been lodged beyond the period prescribed under Section 16(4) of the GST Acts.

2. It is submitted that an amendment has been brought into the GST Acts and that Section 16(5) has now been inserted vide Section 118 of the Finance (No. 2) Act, 2024. The relevant provision reads as under:

“118. In section 16 of the Central Goods and Services Tax Act, with effect from the 1st day of July, 2017, after sub-section (4), the following sub-sections shall be inserted, namely:—

“(5) Notwithstanding anything contained in subsection (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021.”

(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under sub-section (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,—

(i) filed up to thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or

(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later. ”

3. It is submitted by the learned counsel for the petitioner that in view of the above amendment, the reasons cited by the adjudicating authority while passing the impugned order of assessment may no longer survive and the respondent would have to re-do the assessment in accordance with the above amendment.

4. The learned counsel for the petitioner would submit that earlier this Court has on numerous occasions, remanded on the basis of the Bill proposing the present amendment. The learned Government Advocate appearing for the respondent would submit that they would re-do the assessment taking into account the Finance (No.2) Act, 2024.

5. In view thereof, the impugned order passed by the respondent dated 27.07.2024 is set aside. The learned assessing/adjudicating authority/respondent would re-do the assessment by taking into account the amendment referred supra. The petitioner may submit their objection by way of reply, within a period of three (3) weeks from the date of receipt of a copy of this order along with the amendment and other details. If any such reply is filed, the same shall be considered and orders shall be passed, after affording reasonable opportunity of personal hearing to the petitioner. In respect of other issues, if any, the impugned order shall remain undisturbed.

6. Accordingly, the Writ Petition stands disposed of. There shall be no order as to costs. Consequently, connected miscellaneous petitions are closed.