Introduction

This judgment of the Kerala High Court reiterates the beneficial and retrospective operation of Section 16(5) of the CGST Act, introduced by the Finance Act, 2023. The Court held that where a registered person has furnished the relevant returns before the statutory cut-off date prescribed under Section 16(5), the embargo contained in Section 16(4) cannot be invoked to deny Input Tax Credit (ITC).

The Court observed that Section 16(5) contains a non-obstante clause overriding Section 16(4) and was enacted to provide relief to taxpayers who had lost ITC solely due to delayed filing of returns. Consequently, the denial of ITC merely by relying upon Section 16(4), without considering the applicability of Section 16(5), was held to be unsustainable. The impugned order was therefore quashed and the matter remanded for fresh adjudication.