Karnataka High Court has delivered a significant ruling on the eligibility of Input Tax Credit (ITC) claims under the Central Goods and Services Tax Act, 2017 (CGST Act), particularly in light of the retrospective amendment introducing sub-section (5) to Section 16. The petitioner challenged the rejection of its ITC claim, which was denied solely on the ground of delay as per the Order-in-Original dated 22.02.2024, without consideration of the merits.
The core issue before the Court was whether the petitioner’s delayed ITC claim, relating to the financial year 2019-2020, could be allowed in view of the newly inserted Section 16(5) of the CGST Act. The respondent authority had previously held the ITC claim ineligible, citing that the relevant GSTR-3B returns were filed after the deadline of 23 April 2019, as per the then-applicable Section 16(4) and related notifications.
The Court examined the legislative developments, noting that Section 16(5), introduced by the Finance (No.2) Act, 2024, operates with a non-obstante clause, expressly overriding the time restrictions in Section 16(4) for the financial years 2017-18 to 2020-21. The provision entitles registered persons to claim ITC in any return filed up to 30 November 2021. The Court also referred to the Central Board of Indirect Taxes and Customs (CBIC) Circular No. 237/31/2024-GST, which clarified that the amendment is retrospective from 1 July 2017 and that ITC claims through GSTR-3B returns filed up to 30 November 2021 are permissible for the specified years.
Applying this legal framework, the Court found that the petitioner had filed the relevant returns on 30 September 2020, well within the extended period allowed by Section 16(5). The Court emphasized that the non-obstante clause in Section 16(5) clearly overrides the earlier limitation, and thus, the petitioner’s ITC claim could not be denied on the ground of delay alone.
Consequently, the High Court set aside both the Order-in-Original dated 22.02.2024 and the show cause notice dated 05.12.2023. The matter was remitted to the respondent authority for reconsideration in light of the amended legal position and the Court’s observations. The Court directed that, since the petitioner had filed the returns within the stipulated time under Section 16(5), the ITC claim should be considered afresh and adjudicated as per law, keeping all other contentions open.
This decision provides important judicial clarity on the retrospective application of Section 16(5) of the CGST Act, confirming that ITC claims for the specified financial years are valid if the returns were filed before 30 November 2021, regardless of the earlier deadlines under Section 16(4).
Case Reported at:
Case Name: ABE Security Mechanics Pvt. Ltd. v. Superintendent of The Central Tax and Ors.
Case Citation: (2026) taxcode.in 978 HC
