A taxpayer named Vabind, claimed Input Tax Credit for the FY 2018-19 under the Central Goods and Services Tax Act, 2017 (CGST Act). But department rejected the claim as - returns for that year were not filed within the time limit under Section 16(4) of the CGST Act.
The petitioner, Vabind, challenged an order (referred to as Ext.P3) passed by the GST department before the Kerala High Court.
The Court noted that the petitioner’s returns for FY 2018‑19 was filed between 12 February 2019 and 18 December 2019, it has been clear that the returns were filed before the cutoff date as mentioned u/s 16(5) of the Act.
Role of Sections 16(4) and 16(5)
Section 16(4) generally prescribes a last date for availing ITC linked to the due date of filing returns for the relevant financial year or the date of filing the annual return.
Section 16(5), which was inserted later, provides an extended cut‑off date (in this context, 30 November 2021) and begins with the phrase “notwithstanding anything contained in sub‑section (4),” thereby giving it an overriding effect over Section 16(4).
Outcome of the Case
The Kerala High Court quashed the Ext.P3 order for denying ITC and remanded the matter back to the tax authorities for fresh consideration after giving the taxpayer the opportunity of a hearing.
The Court granted the benefit of Section 16(5) to Vabind, confirming that ITC is admissible where returns are filed within the Section 16(5) cut‑off date, even if the department earlier relied on Section 16(4) to deny credit.
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