S.16(5) Allows GST ITC Claims for FY 2017-18 to 2020-21 till Nov 30, 2021: Karnataka HC Quashes Demand on Belated GSTR-3B [Read Order]

The Karnataka High Court recently set aside a Goods and Services Tax (GST) demand raised against a taxpayer for seeking to avail Input Tax Credit (ITC) through a belated GSTR-3B return, holding that Section 16(5) of the Central Goods and Services Tax (CGST) Act permits ITC claims for specified financial years through returns filed up to November 30, 2021.

Petitioner M/s Manjunatha Exports - a partnership firm based in Bengaluru had filed the GSTR-3B return for the month of March 2019 on October 28, 2019. The tax authorities subsequently issued a show cause notice proposing to demand ITC amounting to ₹27,21,200 on the ground that the credit had been availed beyond the time limit prescribed under Section 16(4) of the CGST Act.

The assessing authority noted that the ITC claim was filed belatedly and therefore inadmissible. The decision was carried in the Order-in-Original and Order-in-Appeal,, prompting the petitioner to approach the High Court through this instant writ petition seeking quashal of the impugned orders.

The petitioner, represented by Venkatesh G. contended that the denial of ITC was unsustainable, in light of the retrospective amendment introduced through the Finance (No.2) Act, 2024 inserting sub-section (5) to Section 16 of the CGST Act.

Section 16(5) overrides the earlier restriction contained in Section 16(4) and permits registered persons to claim ITC in respect of invoices pertaining to Financial Years 2017-18, 2018-19, 2019-20 and 2020-21 in any return filed up to November 30, 2021.

The petitioner claimed that since the return for March 2019 had been filed on October 28, 2019, it fell well within the extended time limit provided under Section 16(5) and thus the ITC claim could not be rejected merely on the ground of delay.

Justice S. Sunil Dutt Yadav noted that the retrospective amendment and the clarification issued by the tax authorities regarding its implementation ensured that the petitioner’s claim for ITC through the GSTR-3B return filed on October 28, 2019 could not be treated as time-barred.

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