Assessee Entitled to Input Tax Credit Under Section 16(5) as Returns Were Filed Before Cutoff Date

By | September 30, 2026
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Assessee Entitled to Input Tax Credit Under Section 16(5) as Returns Were Filed Before Cutoff Date

Assessee Entitled to Input Tax Credit Under Section 16(5) as Returns Were Filed Before Cutoff Date

Issue

Whether an assessee can be denied Input Tax Credit (ITC) under Section 16(4) for returns filed after the original due date, even though the returns were submitted prior to the statutory cutoff date of November 30, 2021 specified under Section 16(5).

Facts

  • Assessee Registration: The petitioner is an assessee registered under the CGST/KSGST Act.
  • Denial of ITC: The assessing authority passed an order under Section 73 denying the petitioner’s claim for Input Tax Credit for the period from September 2018 to March 2019 on the ground of time-bar under Section 16(4).
  • Filing Dates: The returns for the relevant periods were filed belatedly on 05.02.2020 and 22.07.2020.
  • Statutory Benefit Invoked: The petitioner relied on Section 16(5), which allows ITC claims where returns are submitted on or before the extended cutoff date of 30.11.2021.
  • Interest Aspect: The assessing authority also noted non-payment of interest for belated payment, a point which the petitioner chose not to contest.

Decision

  • Cutoff Met under Section 16(5): Held that the returns for September 2018 to March 2019 were filed well before the extended deadline of 30.11.2021 mandated under Section 16(5).
  • Subsistence of Entitlement: Held that since the petitioner satisfied the cutoff requirement under Section 16(5), the entitlement to Input Tax Credit subsists regardless of the general time bar under Section 16(4).
  • Partial Quashing of Orders: The orders (Exts P4 and P9) were quashed to the extent they denied ITC on the ground of delayed filing.
  • Remand for Regrant: The assessing authority was directed to reconsider and grant ITC to the petitioner under Section 16(5), provided all other conditions are met.

Key Takeaways

  • Overriding Scope of Section 16(5): Retrospective extension or relaxation provided under Section 16(5) overrides the general restriction specified under Section 16(4) regarding belated ITC claims.
  • Compliance Date Determinative: As long as GSTR-3B returns for FY 2017-18 to 2020-21 were filed on or before 30.11.2021, ITC cannot be validly rejected solely on the ground of late filing.
  • Limited Scope of Relief: The benefit under Section 16(5) applies to the entitlement of Input Tax Credit itself and does not absolve the assessee from statutory interest or penalties for late filing/payment.
HIGH COURT OF KERALA
PBS Traders
v.
Assistant State Tax Officer
ZIYAD RAHMAN A.A., J.
WP(C) NO. 29706 OF 2026
SEPTEMBER  17, 2026
Smt. Sindhu M., Smt. Jasna Kunniyullathil Ismail and Smt. Maria Ancy V.J., Advs. for the Petitioner. Smt. Sindhu Santhalingam, Sr. Govt. Pleader for the Respondent.
JUDGMENT
1. The petitioner is a registered tax payer under the provisions of the CGST/KSGST Act. The challenge raised in this writ petition is against Ext.P4 order passed under Section 73 of the CGST Act, which contain two discrepancies. Firstly, the Input Tax Credit claimed by the petitioner for the period from September 2018 to March 2019 were declined on the reason that the petitioner failed to submit the returns within the statutory period contemplated under Section 16(4) of the Act. Secondly, there is non payment of the interest for the belated payment of the tax as well. Challenge raised by the petitioner is against denial of Input Tax Credit, pertaining to the months from September 2018 to March 2019. Challenge is raised by the petitioner, placing reliance upon Section 16(5) of the CGST Act, which provides for the entitlement of the tax payer to get the Input Tax Credit, in case, the tax payer has submitted the returns on or before 30.11.2021. It is discernible from Ext.P4 order that, the petitioner had submitted the returns pertaining to the period from September 2018 to March 2019 on 05.02.2020 and 22.07.2020. Thus, it is evident that the petitioner submitted relevant returns within the cut off date contemplated under Section 16(5) and hence the petitioner is entitled to get the Input Tax Credit. As far as the interest for the belated payment of the tax and submission of returns are concerned, the petitioner is not contesting the same at present.
2. In such circumstances, this writ petition is disposed of quashing Exts.P4 and P9, to the extent it denied input tax credit on the ground that the petitioner submitted the returns within the period stipulated under Section 16(5) of the Act. There shall be a direction to the assessing authority to reconsider the matter and to grant Input Tax Credit to the petitioner on the strength of Section 16(5), if the petitioner is otherwise entitled.