WE MATCH v. STATE TAX OFFICER TPS CIRCLE (PALARIVATTOM) & ORS.

Introduction

This judgment of the Kerala High Court reiterates the legal position regarding the retrospective benefit granted under Section 16(5) of the CGST Act, which was introduced through the Finance Act, 2023 to provide relief to taxpayers who had lost Input Tax Credit (ITC) solely due to delayed filing of returns. The Court held that where the taxpayer had furnished the relevant returns before the statutory cut-off date prescribed under Section 16(5), the restriction contained in Section 16(4) no longer operates because Section 16(5) begins with a non-obstante clause overriding Section 16(4).

The Court emphasized that the object of Section 16(5) is to revive ITC that had become unavailable only because of delay in filing returns. Therefore, once the statutory conditions under Section 16(5) are fulfilled, ITC cannot be denied merely by relying upon the limitation prescribed under Section 16(4).