GST Section 16(5) Overrides Section 16(4) Limitation for Returns Filed Before Cut-off Date: Kerala HC Quashes Order Denying ITC [Read Order]

The Kerala High Court has quashed an assessment order that denied Input Tax Credit (ITC) to a taxpayer based on the limitation period prescribed under Section 16(4) of the CGST Act, ruling that the non-obstante clause in Section 16(5) overrides the earlier time limits if returns are furnished by the specified cut-off date. The Court held that once a taxpayer complies with the extended deadline of November 30, 2021, provided under Section 16(5), the statutory timelines fixed in Section 16(4) lose their significance.

We Match, a registered taxpayer under the CGST/KSGST Act, approached the Court challenging the order passed under Section 73(9) of the Act for the assessment year2018-19. The Revenue Department had declined the ITC claimed by the petitioner on the ground that the monthly returns for the period from April 2018 to March 2019 were not submitted within the statutory period stipulated under Section 16(4).

The petitioner’s counsel argued that the denial of credit was legally unsustainable in light of Section 16(5) of the Act. It was submitted that Section 16(5) was subsequently introduced to provide relief to taxpayers, stipulating that if returns are furnished on or before 30.11.2021, the taxpayer shall be entitled to the input tax credit.

Justice Ziyad Rahman A.A. noted the factual details on record, observing from the show-cause notice (Ext.P1) that the petitioner had actually filed the returns for the disputed period on 27.11.2019 and 28.11.2019. The Court pointed out that these dates were well before the cut-off date of 30.11.2021 contemplated under Section 16(5).

The Court observed that Section 16(5) contains a non-obstante clause regarding Section 16(4). This means that if a taxpayer submits the return within the cut-off date fixed in Section 16(5), the time limit prescribed in Section 16(4) becomes inapplicable. The Court held that since the petitioner had filed the returns before the cut-off date, they were entitled to the benefit of the provision.

Accordingly, the High Court disposed of the writ petition, quashing the impugned assessment order. A direction was issued to the State Tax Officer to reconsider the matter and grant the benefit of Section 16(5) to the petitioner, provided they are otherwise eligible for the credit.

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