Section 16(5) Protects ITC Claims Where Returns Were Filed by 30 November 2021

The petitioner challenged an adjudication order dated 27 August 2024, a rectification order dated 6 January 2025, and appellate orders dated 6 February and 7 April 2025 concerning input tax credit (ITC) for financial year 2019–20.

The petitioner had filed its GSTR-3B returns for July 2018 to March 2020 after the ordinary due date but before 30 November 2021, and argued that the retrospective insertion of Section 16(5) of the CGST/WBGST Act entitled it to ITC.

During the writ proceedings, ₹1,92,03,770 was debited from the petitioner’s Electronic Credit Ledger toward the disputed demand, and the ledger had also been blocked.

The respondents opposed the petition, contending that Section 16(5) did not apply and could not reopen a concluded assessment.

Whether the petitioner could claim the benefit of Section 16(5) for ITC relating to financial year 2019–20 when its returns were filed before 30 November 2021, notwithstanding the impugned orders.

Whether the impugned orders and the recovery action involving the Electronic Credit Ledger should be set aside or reconsidered in light of Section 16(5).

Section 16(5) of the CGST/WBGST Act, inserted by the Finance (No. 2) Act, 2024 with effect from 1 July 2017, provides that, notwithstanding Section 16(4), a registered person is entitled to take ITC for invoices or debit notes relating to financial years 2017–18 to 2020–21 in a return under Section 39 filed up to 30 November 2021.

The Court treated the amendment as curative and retrospective.

It relied on Hiranmoy Dutta v. State of West Bengal, [2025] 172 taxmann.com 750 (Calcutta), which held that returns filed by the statutory cut-off were regularized under Section 16(5), so the taxpayer could not be denied the amendment’s benefit.

The Court found that the petitioner had filed the relevant returns before 30 November 2021, bringing them within the cut-off in Section 16(5).

Applying the reasoning in Hiranmoy Dutta, it concluded that the petitioner could not be denied the benefit of the retrospective amendment merely because the returns were filed after the ordinary due date or because orders had already been made.

Given that conclusion and the disputed recovery and ledger action, the Court set aside the impugned orders and directed readjudication, including consideration of the ledger blocking, rather than finally determining the disputed assessment itself.

It directed the respondent authority to readjudicate the matter, including the Electronic Credit Ledger issue, after giving the petitioner a personal hearing and passing a reasoned order by 30 November 2026. The authorities were restrained from taking further coercive steps until readjudication.