Madras HC Partly Quashes GST Order Against Puducherry Dealer For ITC Claims Within Section 16(5)’s November 30, 2021 Cutoff

The petitioner, a registered GST dealer, challenged the respondent’s order dated 30 December 2023, which reversed or denied input tax credit (ITC) on limitation grounds and directed payment of tax, penalty and interest.

He sought to have the order quashed and to receive a fresh hearing.

At the hearing, both counsel submitted that the issue was covered by the High Court’s common order dated 17 October 2024 in W.P. Nos. 25081 of 2023 and connected cases; the respondent’s counsel accepted that position.

Section 16(4) of the CGST Act ordinarily limits the time for taking ITC.

Section 16(5), operating notwithstanding Section 16(4), provides that for invoices or debit notes relating to financial years 2017–18 to 2020–21, a registered person is entitled to take ITC in a return under Section 39 filed by 30 November 2021.

The Court applied its common order of 17 October 2024 in W.P. Nos. 25081 of 2023 and connected cases, which held that orders denying ITC solely on the basis of Section 16(4) could not stand to the extent the claims were covered by Section 16(5).

The Court treated the present limitation issue as covered by its 2024 common order and noted that the respondent did not oppose applying that decision.

It therefore quashed the impugned order only insofar as it denied ITC on limitation grounds where the claim was within Section 16(5)’s prescribed period.

The ruling did not foreclose departmental action on other issues concerning the correctness or genuineness of the ITC claim.

The impugned order was quashed to the extent it denied ITC on limitation grounds covered by Section 16(5), and the Department was restrained from taking action under that order based on limitation.

The Court also directed de-freezing of any bank account frozen pursuant to the order, provided for dropping specified recovery action during the writ proceedings, and permitted amounts collected or deposited to be refunded or used towards future tax.

The Department retained liberty to proceed in accordance with law on other ITC-related issues.

No costs were ordered.