In a significant ruling, the High Court of Jharkhand has quashed an order disallowing Input Tax Credit (ITC) of ₹11,93,004 to Shri Sai Super Market, a proprietorship firm based in Bokaro.
The bench comprising Chief Justice M.S. Ramachandra Rao and Justice Deepak Roshan directed the Central Goods and Services Tax (CGST) authorities to refund the disallowed ITC along with interest.
The petitioner, Shri Sai Super Market, through its proprietor Sunil Kumar, challenged the Order-in-Original dated August 14, 2024, passed under Section 73 of the CGST Act, 2017.
The order disallowed ITC on the grounds that the petitioner filed its GSTR-3B returns for the financial year 2019-20 after the due date specified under Section 39 of the CGST Act.
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However, the petitioner contended that the Finance (No. 2) Act, 2024, extended the deadline for filing GSTR-3B returns for financial years 2017-18 to 2020-21 until November 30, 2021. The new provision, inserted as Section 16(5), took retrospective effect from July 1, 2017. The petitioner argued that their returns were filed within this extended timeline and, therefore, they were entitled to claim ITC.
After hearing both sides, the court acknowledged the legislative intent behind the Finance (No. 2) Act, 2024. It noted that the extended filing deadline was binding on the respondents (CGST authorities) and that disallowing ITC for late filing under Section 39 contradicted the amended law.
The bench observed that, “In view of Clause (5) of Section 16 inserted by the Finance (No. 2) Act, 2024, with effect from 01.07.2017, the respondents are directed to allow the petitioner to take Input Tax Credit in respect of delayed returns filed for the Financial Year 2019-20.”
The bench, in respect of Refund of Disallowed ITC, held that the CGST authorities must allow the petitioner to claim ITC amounting to ₹11,93,004.
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Additionally, Interest at the rate of 6% per annum shall be paid from the date of collection of the disputed amount until the date of repayment, the High Court added.
It was further remarked that any penalties levied on account of the delayed return filing are to be refunded.
This judgment sets a significant precedent for businesses that filed delayed GSTR-3B returns within the extended period specified under the Finance (No. 2) Act, 2024, which clarifies the retrospective application of Section 16(5) and reinforces the rights of taxpayers to claim ITC under the amended provisions.
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