Input Tax Credit Cannot Be Denied Under Section 16(4) When Returns Were Filed Before Cut-Off Date of November 30, 2021 as Contemplated Under Section 16(5)
Input Tax Credit Cannot Be Denied Under Section 16(4) When Returns Were Filed Before Cut-Off Date of November 30, 2021 as Contemplated Under Section 16(5)
Issue
Whether an assessee is entitled to Input Tax Credit (ITC) for the period October 2019 to March 2020 under Section 16(5) when the relevant returns were filed prior to November 30, 2021, notwithstanding the initial time limit under Section 16(4).
Facts
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Assessee Profile: The petitioner is a taxpayer registered under the CGST/Kerala GST Acts.
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Assessment Action: The tax authority initiated proceedings under Section 73 (demands not involving fraud) and denied ITC for the months of October 2019 to March 2020 on the ground that returns were not filed within the statutory time limit under Section 16(4).
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Supplier Non-Compliance Allegation: The assessment order also cited alleged non-compliance with the condition regarding tax payment by the supplier.
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Filing Dates: The petitioner had filed the returns for the period in question on 14.01.2021, 15.01.2021, and 29.09.2021—all prior to the cut-off date of 30.11.2021.
Decision
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Benefit of Section 16(5): Section 16(5) provides entitlement to ITC where returns for FY 2019-20 were submitted on or before 30.11.2021.
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Unsustainable Denial: Since all relevant returns were filed prior to the cut-off date, denying ITC solely on the basis of a breach of Section 16(4) was held to be legally unsustainable.
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Quashing of Order: The impugned assessment order was quashed, and the assessing authority was directed to reconsider and grant credit under Section 16(5), provided the petitioner is otherwise eligible.
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Supplier Tax-Payment Issue: Regarding the condition of tax payment by the supplier, the petitioner was permitted to submit supporting declarations within one month, and the authority was directed to decide the issue after giving a personal hearing.
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Verdict: Decided in favor of the assessee.
Key Takeaways
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Overriding Effect of Section 16(5): Retrospective/remedial provisions like Section 16(5) extend the time limit for claiming ITC for FY 2019-20 up to 30.11.2021, relaxing the strict timeline prescribed under Section 16(4).
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Returns Filed Prior to Cut-Off Are Eligible: If GSTR-3B returns for FY 2019-20 were furnished on or before 30.11.2021, tax authorities cannot disallow ITC on the grounds of late filing.
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Opportunity to Prove Supplier Compliance: Taxpayers facing disallowances related to non-payment of tax by suppliers must be afforded an opportunity to submit necessary declarations and evidence before final adjudication.
HIGH COURT OF KERALA
Ezhupunna South Service Co-Operative Bank Ltd.
v.
State Tax Officer
ZIYAD RAHMAN A.A., J.
WP(C) NO. 23682 OF 2026
JULY 10, 2026
Nikhil John and K.J. Abraham, Advs. for the Petitioner. Shaij Raj T.K., Sr. GP for the Respondent.
JUDGMENT
1. The petitioner is a registered tax payer under the provisions of SCGST/KSGST Act. The grievance highlighted by the petitioner is against Ext.P4, the order passed under Sec.73 of CGST Act, in respect of the assessment year 2019-2020. As per Ext.P4, the assessment was completed mainly on two grounds. One is for non-compliance of Sec.2(c) of the Act and the other is the denial of input tax credit claimed by the petitioner for the year 2019-2020 on the reason that, the petitioner failed to submit the return for the months of October 2019 to March 2020 within in the period stipulated under Sec.16(4) of the CGST Act.
2. The main challenge raised by the petitioner is by placing reliance upon Sec.16(5) of the Act, wherein, it is contemplated that, if the taxpayer is submitting the returns within the cutoff date contemplated under the said provision, i.e. on 30.11.2021, such taxpayer would be entitled to get the input tax credit. In this case, all the returns were submitted by the petitioner before the said period and therefore, the petitioner is entitled to the said benefits. On perusal of Ext.P1 GST ASMT-10, it is discernible that, the petitioner had submitted the returns for the months from October 2019 to March 2020 on 14.01.2021, 15.01.2021 and 29.09.2021. Thus, all the returns are seen submitted before the cutoff date, contemplated under Sec.16(5) of the Act and therefore, the petitioner is entitled to the benefits of input credit.
3. As regards Sec.16(2)(c) of the Act, the submission of the petitioner is that, it may be possible for the petitioner to furnish the declarations of the suppliers, to substantiate the transactions and the tax remittance.
4. In such circumstances this writ petition is disposed of, quashing Ext.P4, with a direction to the assessing authority to reconsider the matter and to grant the petitioner the input tax credit, on the strength of Sec.16(5) of the CGST Act, if the petitioner is otherwise entitled to the same. With regard to Sec.16(2)(c), it is clarified that, it shall be open to the petitioner to submit declarations, if any, to substantiate the same, within the period of one month from the date of receipt of copy of this judgment. Entire proceedings shall be completed within a period of four months from the date of receipt of copy of this judgment, after affording an opportunity of hearing to the petitioner.