GST Payers Entitled to avail ITC for FYs 2017-18 to 2020-21 on GSTR-3B Filed on or before 30.11.2021- Madras HC WP No.17026 of 2024, decided 21 August 2025 in case of M/s Power Builders

The Madras High Court held in Power Builders Versus Superintendent Of Gst And Central Excise Range- I, Mylapore Division and Union Of India - 2025 (9) TMI 975 - MADRAS HIGH COURT that registered taxpayers are entitled to claim ITC for the financial years 2017-18 to 2020-21 if their GSTR-3B returns were filed on or before 30 November 2021.

The Court quashed an assessment order for FY 2018-19 which had denied ITC merely on the ground that the claim was time-barred under Section 16(4) of the CGST Act

Key Portions of the Order (Power Builders v. Superintendent of GST)

From Power Builders vs Superintendent of GST & Central Excise (WP No.17026 of 2024), decided by Justice Krishnan Ramasamy, 21 August 2025:

The Facts

• Petitioner: Power Builders, a partnership firm.
• It challenged an Order-in-Original (No. 09/2024 – GST) dated 10 April 2024 (FY 2018-19) that disallowed ITC and imposed tax, interest, penalty on the ground that the claim was time-barred under Section 16(4) of the CGST Act.
• The petitioner’s GSTR-3B return for that period was filed on or before 30 November 2021.
• Legal / Statutory Provisions

• Section 16(4) (pre-amendment): imposes a limitation on claiming ITC: after the 30th November following the end of the financial year to which the invoice or debit note pertains, or furnishing of the relevant annual return, whichever is earlier.
• Section 16(5) was inserted by the Finance Act (No.2) of 2024, with retrospective effect from 1 July 2017, to allow registered persons to take input tax credit in any return under Section 39 filed up to 30 November 2021, for invoices or debit notes pertaining to FYs 2017-18, 2018-19, 2019-20 and 2020-21.

What the Court Held

Some of the key findings and directions:

• The Court held that the issue in Power Builders is covered by an earlier batch decision (W.P. Nos. 25081 of 2023 etc., decided 17 October 2024) where it was already held that insofar as ITC claims are concerned

which are barred by Section 16(4), but where the GSTR-3B return was filed on or before 30 November 2021, Section 16(5) gives relief.

• The Court quashed the impugned order (the disallowance) insofar as ITC was denied purely on the ground of limitation under Section 16(4).
• Ordered that:
  1. The respondent (tax authorities) is restrained from initiating further recovery proceedings on the basis of disallowance of ITC under Section 16(4) where returns were filed in time (i.e. by 30 Nov 2021).
  2. If any bank accounts of the petitioner had been frozen pursuant to the impugned order, they must be defrozen.
  3. If tax was collected or amounts were remitted under the disallowance order, those must be refunded or re-credited to the petitioner’s cash/credit ledger, or if already deposited, allowed for adjustment in future tax liabilities.
• The Court also clarified that the Department is free to examine/allay claims not purely limitation-based  e.g. where there are alleged discrepancies, fake invoices, excess claims etc. The relief does not cover those issues.
• The Court held there is no cost, and connected Miscellaneous Petitions are closed.

Earlier Decision (Batch of Writ Petitions) on 17 Oct 2024

• The Power Builders order refers back to a common order in W.P. Nos. 25081 of 2023 etc. (batch) dated 17 October 2024, where Madras High Court recognized insertion of Section 16(5) and held that ITC claims for FYs 2017-18 to 2020-21 would be valid if the GSTR-3B was filed by 30 November 2021.
• In those, the Court also quashed earlier orders denying ITC purely for limitation under Section 16(4).

Statutory / Regulatory Backing

These developments are backed by:

• GST Council recommendation (53rd GST Council meeting, 22 June 2024) recommending extension for availing of ITC under Section 16(4) for specified FYs. (Finance Act (No.2) of 2024which inserted Section 16(5) (and 16(6)) to the CGST Act, effective retrospectively from 1 July 2017.
• Notification No.17/2024-Central Tax dated 27 September 2024 and Circular No. 237/31/2024-GSTclarifying the implementation of the amended provisions.

Implications & Clarifications

• Who gets benefit: Registered persons who had supplies/invoices in FY 2017-18 through 2020-21, and whose GSTR-3B returns were filed on or before 30 November 2021, even if their invoices were not claimed before or were previously denied under Section 16(4). Power Builders confirms that such persons are entitled to claim ITC by virtue of Section 16(5).
• What is not covered by this relief: Claims denied for other reasons (fake invoices, wrong claims, discrepancies, etc.), or where returns were filed after 30 November 2021. Also, this doesn’t override other statutory requirements (e.g. payment of tax by supplier, etc.).
• Refund of amounts: If the taxpayer had already suffered financial consequences (freezing of bank accounts, payments, etc.), the order allows refunds or re-credit/adjustment in future liabilities.

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Written and Edited by

Ketaan Mehta

Founder & CEO

“Mahta Tax Advisory Services”