GST ITC Denial Without Considering Retrospective Relief u/s 16(5) Unjustified: Calcutta HC Remands Case [Read Order]
The High Court noted that the extended benefit provided under Section 16(5) had substantially altered the scope and application of Section 16(4)
The Calcutta High Court held that denying Input Tax Credit ( ITC ) under the Goods and Services Tax (GST) Act without considering the retrospective effect of Section 16(5) of the CGST/WBGST Act, 2017 is unjustified.
The petitioner, DYS Impex Private Limited, had challenged an appellate order dated February 21, 2024, which upheld a partial refund rejection (in Form GST RFT-06 dated April 14, 2023) for the tax period of July to September 2019.
The refund was denied on the ground that the ITC was claimed belatedly in respect of inward supplies relating to the financial year 2017-18, allegedly beyond the time limit prescribed under Section 16(4) of the GST Act.
However, the petitioner argued that the insertion of Section 16(5) with retrospective effect from July 1, 2017, permitted the availment of ITC for the financial years 2017-18 to 2020-21 in any return filed up to 30th November 2021. Therefore, their refund claim could not have been rejected on grounds of limitation.
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Justice Raja Basu Chowdhury, agreeing with this contention, observed that both the proper officer and the appellate authority erred by not appreciating the retrospective amendment to Section 16 through insertion of sub-section (5).
The High Court noted that the extended benefit provided under Section 16(5) had substantially altered the scope and application of Section 16(4).
The Court stated that since the refund denial rested solely on the limitation under Section 16(4), without accounting for the overriding effect of Section 16(5), such rejection could not be sustained.
As a result, the Court quashed both the appellate and adjudication orders and remanded the matter to the proper officer for de novo consideration in light of the amended provision.
The proper officer was directed to dispose of the matter afresh after hearing the petitioner, preferably within twelve weeks of the order’s communication.
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