GST ITC Cannot Be Denied If FY 2019-20 Return Filed Before 30 Nov 2021: Kerala HC [Read Order]
The court held that input tax credit for FY 2019-20 cannot be denied if the GST return was filed before 30 November 2021, as Section 16(5) of the CGST Act overrides the earlier time limit.
In a recent ruling, the Kerala High Court held that input tax credit relating to the financial year 2019-20 cannot be denied solely on the ground of delay in filing returns, if the return was filed before the cut-off date of 30 November 2021 as prescribed under Section 16(5) of the Central Goods and Services Tax Act (CGST) Act.
The case arose after the State GST authorities passed an order under Section 73 of the CGST Act rejecting the petitioner’s claim for input tax credit on the ground that the return for March 2020 was not filed within the time limit prescribed under Section 16(4) of the Act. Based on this order, recovery proceedings was also initiated against the petitioner.
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The petitioner's counsel argued that though the return for March 2020 was filed on 2 November 2020, the authorities wrongly denied the credit by relying on Section 16(4). The counsel submitted that Section 16(5) of the CGST Act, which was introduced later, permits a taxpayer to claim input tax credit for the financial year 2019-20 if the return was filed on or before 30 November 2021.
The counsel argued that the petitioner’s return was filed much before this cut-off date, so the denial of credit was illegal.
After hearing both sides, the single-judge bench of Justice Ziyad Rahman A.A. observed that the impugned order itself shows that the return for March 2020 had been filed on 2 November 2020. The court explained that Section 16(5) starts with a non-obstante clause and overrides the time limit prescribed under Section 16(4) of the GST Act.
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Once the conditions under Section 16(5) are satisfied, the earlier limitation under Section 16(4) loses its relevance.In view of this, the Court held that interference was required in the matter. The court quashed the order rejecting the input tax credit as well as the recovery notice issued thereafter.
It directed the concerned State Tax Officer to reconsider the matter and grant the benefit of input tax credit under Section 16(5) of the CGST Act, if the petitioner is otherwise eligible, after giving him an opportunity of hearing. The court further directed that fresh orders shall be passed within three months from the date of receipt of the judgment.
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