Introduction

• The petitioner was denied the benefit of Input Tax Credit (ITC) for the financial year 2018-19 by an order dated 18.04.2024.
• The denial was solely based on the limitation prescribed under Section 16(4) of the CGST/SGST Acts, which restricts the time for availing ITC.
• Subsequently, the Finance Act inserted Section 16(5) into the CGST Act, granting a one-time relaxation by extending the time limit for claiming ITC relating to specified financial years.
• The petitioner contended that in view of this statutory amendment, the earlier order denying ITC had become unsustainable and sought reconsideration of the claim.

Issue

Whether an order denying Input Tax Credit under Section 16(4) for the financial year 2018-19 can continue to operate after the introduction of Section 16(5) extending the time limit for claiming ITC?

Petitioner’s Contentions

• The petitioner submitted that ITC had been denied exclusively on the basis of the limitation prescribed under Section 16(4).
• With the introduction of Section 16(5), the statutory time limit for availing ITC stood extended for the relevant financial years.
• Consequently, the petitioner became entitled to the benefit of ITC under the amended provisions.
• Therefore, the impugned order required reconsideration in light of the subsequent legislative amendment.

Department’s Contentions

• The Standing Counsel for the department opposed the writ petition.
• However, the department did not dispute that the competent authority would be required to consider the effect of the newly inserted Section 16(5) while deciding the petitioner’s entitlement to ITC.

High Court’s Findings

The High Court observed that: