GST S. 16(5) Relief: Jharkhand HC orders Fresh Adjudication of ITC Claim, Union Concedes with Decision [Read Order]
The court observed that the impugned order had been passed without considering the newly inserted Section 16(5). Since the provision explicitly overrides S. 16(4) and provides extended timelines for availing ITC for earlier years, the disallowance order could not stand
ITC Claim
ITC Claim
The Jharkhand High Court, in a recent ruling, quashed an ex-parte order disallowing input tax credit ( ITC ) under Section 16(4) of the GST ( Goods and Services Tax ) Act, 2017.
The Court directed a fresh adjudication of the ITC claim in light of the retrospective insertion of Section 16(5) through the Finance Act, 2024, with the Union of India itself conceding to a remand.
The petitioner, Vinod Udaipuri, challenged the disallowance of ITC worth ₹30.29 lakh for the period July 2018 to March 2019, which had been denied on grounds of belated claim under Section 16(4). The order also imposed interest under Section 50 and an equal amount of penalty under Section 122(2)(a).
Mr. Sumeet Gadodia, Advocate, appearing for the counsel argued that the restrictive time limit in Section 16(4) was unconstitutional and that the subsequent insertion of Section 16(5), effective retrospectively from 1st July 2017, permitted availment of ITC up to 30th November 2021for FYs 2017-18 to 2020-21.
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Appearing for the Union, the Senior Standing Counsel candidly admitted that in view of Section 118 of the Finance Act, 2024, which inserted Section 16(5), the matter required fresh adjudication. The respondents therefore did not oppose remand of the case.
A Division Bench of Chief Justice Tarlok Singh Chauhan and Justice Rajesh Shankar observed that the impugned order had been passed without considering the newly inserted Section 16(5). Since the provision explicitly overrides Section 16(4) and provides extended timelines for availing ITC for earlier years, the disallowance order could not stand.
Accordingly, the Court quashed the Order-in-Original dated 19.05.2023 as well as the consequential Summary Order dated 25.08.2023, and remitted the matter to the adjudicating authority for a fresh decision in light of the newly inserted Section 16(5) of the CGST Act.
The Court directed the authority to pass a reasoned order within two months from the date of receipt of its judgment. It further clarified that the bench had not gone into the merits of the ITC claim, leaving all substantive issues open for consideration during the fresh adjudication.
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