Commissioner of CGST & CX Archives - Tax Heal https://www.taxheal.com/tag/commissioner-of-cgst-cx Complete Guide for Income Tax and GST in India Wed, 30 Sep 2026 06:52:47 +0000 en-US hourly 1 https://wordpress.org/?v=7.1.2 Reversal of Input Tax Credit Set Aside as Retrospective Relaxation Under Section 16(5) Applies https://www.taxheal.com/raja-basu-chowdhury-j-9.html Wed, 30 Sep 2026 06:52:47 +0000 https://www.taxheal.com/?p=141769 Reversal of Input Tax Credit Set Aside as Retrospective Relaxation Under Section 16(5) Applies Issue Whether an order demanding reversal of Input Tax Credit (ITC) due to delayed filing of GSTR-3B returns for FY 2018-19 can be sustained after the retrospective insertion of Section 16(5) under the Finance (No. 2) Act, 2024. Facts Demand &… Read More »

]]>
Reversal of Input Tax Credit Set Aside as Retrospective Relaxation Under Section 16(5) Applies

Issue

Whether an order demanding reversal of Input Tax Credit (ITC) due to delayed filing of GSTR-3B returns for FY 2018-19 can be sustained after the retrospective insertion of Section 16(5) under the Finance (No. 2) Act, 2024.

Facts

  • Demand & Reversal: A Show Cause Notice (SCN) in Form DRC-01 was issued to the petitioner, resulting in an assessment order under Section 74 demanding the reversal of Input Tax Credit solely due to delayed return filing for FY 2018-19.
  • Rejection of First Appeal: The petitioner filed an appeal against the demand order, which was dismissed by the appellate authority without granting any relief.
  • Retrospective Statutory Amendment: The Finance (No. 2) Act, 2024 inserted Sections 16(5) and 16(6) with retrospective effect from July 1, 2017, relaxing the timeline for claiming ITC provided GSTR-3B was filed on or before November 30, 2021.
  • Compliance & Rectification: The petitioner filed GSTR-3B within the extended outer limit of November 30, 2021, and submitted a rectification application pursuant to the notification dated October 8, 2024, a fact undisputed by the Revenue.

Decision

  • Retrospective Benefit Allowed: Held that even though the impugned demand order preceded the statutory amendment, Section 16(5) operates retrospectively from July 1, 2017, making the petitioner fully eligible for its benefit.
  • Perversity of Appellate Order: Held that dismissing the appeal while ignoring the validly submitted rectification application was perverse and sustaining such an order would cause a failure of justice.
  • Quashing of Orders: The Supreme Court/High Court set aside both the order of the appellate authority and the demand order passed by the proper officer.

Key Takeaways

  • Overriding Effect of Section 16(5): The retrospective insertion of Section 16(5) from July 1, 2017, overrides prior demand orders passed under Section 73 or Section 74 that disallowed ITC strictly due to delayed return filing.
  • Cut-Off Deadline Compliance: So long as GSTR-3B returns for the period between July 1, 2017, and March 31, 2021, were filed on or before November 30, 2021, the claimed ITC is legally protected.
  • Duty to Consider Rectification Applications: Appellate and assessing authorities are legally bound to give effect to statutory notifications and pending rectification applications arising from retrospective legislative amendments.
HIGH COURT OF CALCUTTA
Sumant Kumar Agarwal
v.
Commissioner of CGST & CX
Raja Basu Chowdhury, J.
WPA 1995 of 2026
SEPTEMBER  10, 2026
Dhiraj Lakhotia, Ms. Radhika Agarwal, Ms. Nikita Kundu, Ms. Neha Lama and Ms. P. Chowdhury for the Petitioner. Dilip Kumar Agarwal and Biswaraj Agarwal for the Respondent.
ORDER
1. Challenging the communication of rejection of an appeal under Section 107 of the WBGST/CGST Act, 2017 (hereinafter referred to as the said Act) dated 15th May, 2024 arising out of a challenge to an order passed under Section 74(9) of the said Act dated 23rd May, 2023 for the tax period of 2018-19, the instant writ petition has been filed.
2. Mr. Lakhotia, learned advocate representing the petitioner has drawn attention of this Court to the show-cause notice issued in form DRC 1 dated 15th June, 2022 and the order passed under Section 74(9) of the said Act and would submit that the entire demand was on account of reversal of input tax credit in terms of Section 16(4) of the said Act, for the petitioner having not filed the returns within the time specified in the sub-Section. He would submit that the said Act has, however, subsequently been amended and sub-section 5 and sub-section 6 have been inserted by Finance (No. 2) Act, 2024 with effect from 1st July, 2017 and as such having regard to the newly inserted sub-Section 5, since the date of filing of the return in form GSTR 3B by the petitioner in within the outer time limit date of 30th November, 2021, the petitioner is entitled to the benefit of the said subSection, and the order passed under Section 74(9) of the said Act cannot be sustained inasmuch as the entire basis of such order stands removed. He has also drawn attention of this Court to the application for rectification dated 7th April, 2025 filed in terms of the notification dated 8th October, 2024 for availing benefit of sub-Section 5 of Section 16 of the said Act.
3. Unfortunately, the appellate authority did not consider the same and by a cryptic order, has rejected the appeal.
4. Mr. Agarwal, learned advocate appears for the CGST authorities. Having regard to the findings returned by the proper officer in the order passed under Section 74(9), he does not dispute the fact that the returns have been filed within the extended time limit provided for in Section 16(5) of the said Act.
5. Having heard the learned advocates appearing for the respective parties and noting that the proper officer may not have committed any irregularity in passing the order inasmuch as an order is passed prior to insertion of Section 16(5) of the said Act, however, since Section 16(5) has been inserted with effect from 1st July, 2017, I am of the view that the petitioner is entitled to the benefit thereof, in any event, the petitioner has also in terms of the notification dated 8th October, 2024 had duly made the rectification application. The order of rejection of appeal appears to ignore the aforesaid. The order passed by the appellate authority, in my view, is perverse. The above order passed by the appellate authority if permitted to sustain would tantamount the failure of justice.
6. In the peculiar facts the order passed by the appellate authority as also by the proper officer under Section 74 (9) of the said Act is set aside.
7. All consequences shall follow.
8. With the above observations and directions, the writ petition is disposed of.
]]>