TaxTMI 
TaxTMI 
TaxTMI 
The High Court of Kerala at Ernakulam on 04/12/2025 in wp (civil) 45451 of 2025 in the matter of PAZHASSI MOTORS Versus STATE OF KERALA and Others - 2025 (12) TMI 1186 - KERALA HIGH COURT has come out with a beautiful verdict which is analysed in this article.
The petitioner for reasons beyond his control has failed to claim ITC pertaining to May 2018 to March 2019 within the stipulated time as provided under section 16(4). The petitioner challenged the validity of Section 16(4) before the jurisdictional high court and the same was rejected.
However, the Government on 27/09/2024 introduced a new sub-section 5 to section 16 with retrospective effect from 01/07/2017 itself to benefit the taxpayers who suffered due to 16(4) during the period up to March 2021. Despite this being the initiative from the Government to reduce the damages already done to the extent possible, the adjudication authority took a tough and irrelevant stand that as the challenge to Section 16(4) by the petitioner was not admitted by the High court, the taxpayer must file a case against that order and get that order modified to become eligible for taking advantage of Section 16 (5).
This stand by the Adjudication officer looks strange and it proves that the adjudication officers shall go to any extend to deprive the benefits which are granted by statutory provisions. Aggrieved against the stand of the Adjudication officer in denying the benefits contained in section 16(5), even when all applicable conditions of 16(5) are fulfilled, the taxpayer, left with no option, approached the jurisdictional high court again.
The Court has examined the issue at length and held that Section 16(5) is more powerful than 16(4) as the section begins with the words Notwithstanding anything contained in sub section (4), the stand taken by the adjudication officer is incorrect.
The operative portions are reproduced below:
However, after considering all relevant aspects, I am not inclined to accept the said contention. This is particularly because, the claim now raised by the petitioner is based on a statutory provision that was introduced later, and it specifically provides for input tax credit, subject to the condition that the returns are filed before the 30th day of November, 2021. Apart from the fact that the returns are to be filed within the said cut off date, no other conditions are imposed in Section 16(5), and it is also a relevant aspect to notice that Section 16(5) starts with the wording “notwithstanding anything contained in Sub-section 4.” This would indicate that, once the tax payer submits the return within the period stipulated in Section 16(5), the time limit contemplated under Section 16(4) of the CGST loses its significance. Therefore, this being a separate statutory provision subsequently introduced, it amounts to a fresh cause of action for the petitioner to claim the relief sought in this writ petition. Therefore, I find that, the fact that the petitioner had earlier approached this Court challenging Section 16(4) of the CGST Act and got an adverse order, cannot be a reason not to entertain this writ petition. In such circumstances the petitioner is entitled to the benefit of Section 16(5), and hence an interference is required. Accordingly, this writ petition disposed of quashing Ext. P1, with a direction to the 2nd respondent to reconsider the matter and pass fresh orders, by giving the petitioner an opportunity to be heard. While passing the said order, the benefit of Section 16(5) shall be granted to the petitioner, if the petitioner is otherwise entitled to the same.
It may be concluded that as appeals to GSTAT are open till 30/06/2026, tax professionals may kindly review all the cases covered under Section 16 (5) and in case they did not get a favorable order as provided under section 16(5), they may act immediately based on this case law and file the appeal immediately with first appellate authority or GSTAT, as the case may be.