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Section 16 (5) was inserted on 27/09/2024 with retrospective effect from 01/07/2017 itself which reads as '[(5) Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021'. This is one of the best amendments that have taken place in GST laws in order to help the taxpayers re-avail the genuine ITC in case the same was denied on procedural formalities on account of delayed filing of the GST returns.
This is a highly beneficial provision and CBIC also issued a circular on detailing the procedures in an exhaustive manner so as to ensure that the intended benefits of the amendment is made applicable to the maximum extent. The circular number 237/31/2024 dated 15/10/2024 stipulates a time limit of six months in par 3.5 of the said circular which reads as '3.5 Where order under section 73 or section 74 of the CGST Act has been issued but no appeal against the said order has been filed with the Appellate Authority, or where the order under section 107 or section 108 of the CGST Act has been issued by the Appellate Authority or the Revisional Authority but no appeal against the said order has been filed with the Appellate Tribunal: In such cases, where any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of sub-section (4) of section 16 of the CGST Act, but where such input tax credit is now available as per the provisions of sub-section (5) or sub-section (6) of section 16 of the CGST Act, and where appeal against the said order has not been filed, the concerned taxpayer may apply for rectification of such order under the special procedure under section 148 of the CGST Act notified vide Notification No. 22/2024 - Central tax dated 08.10.2024, within a period of six months from the date of issuance of the said notification'.
What happens to a taxpayer who has filed the applicable returns prior to 30/11/2021 in line with the amendment for the tax periods ending up to 31/03/2021 but failed to take advantages as stipulated in circular dated 15/10/2024?. Do the taxpayers loose the ITC benefits, despite the non-obstante clause in section 16 (5) which completely overrides section 16(4) ?. The answer is in the affirmative and in favour of the taxpayer. The jurisdictional high courts still allow the writs in favour the taxpayer despite the availability of efficacious alternate remedy under second appeal which is operational now.
Recently on 22/05/2026, the Kerala High court examined this issue and in their brief order in WP (c) 17290/ of 2026 in the matter of VELLARAM KUNNUMAL PRABEESH Versus SUPERINTENDENT, CENTRAL TAX AND CENTRAL EXCISE KOZHIKODE AND ASSISTANT COMMISSIONER, CENTRAL TAX & CENTRAL EXCISE OFFICE OF THE COMMISSIONER OF CENTRAL TAX & CENTRAL EXCISE KOZHIKODE URBAN DIVISION MANANCHIRA KOZHIKODE - 2026 (6) TMI 167 - KERALA HIGH COURT has held that the benefits are available to the taxpayer.
It is worth to notice that the High Court found merits in the submissions of the appellants and allowed the writ in favour of the taxpayer by remanding the matter with instructions that 16 (5) is to be considered in a beneficial manner as it overrides 16 (4).
This is not the only judgment but there are a series of such judgements. Hence, it is the most appropriate time for all taxpayers who have missed the deadline in line with circular dated 15/10/2024 as this is only a curable defect.
This view is fully supported by the recent orders of the high courts as reported in Sri Srinivasa Enterprises, Rep. By Its Proprietor R. Harikrishnan Versus The Assistant Commissioner (State Tax) (FAC) Gummidi Poondi Assessment Circle, Chennai - 2025 (3) TMI 1017 - MADRAS HIGH COURT as well as M/s. Emotions Transmission Pvt. Ltd. Versus Union of India, through the Principal Commissioner, Central Goods and Service Tax and Central Excise, Ranchi, Assistant Commissioner, Central Goods and Service Tax and Central Excise, Range Deoghar, Superintendent, Central Goods and Service Tax and Central Excise, Range Deoghar. - 2026 (5) TMI 572 - JHARKHAND HIGH COURT.
The lessons to be taken from all the above three decisions of three different high courts is loud and clear and those who have missed the bus earlier may still litigate on 16 (5) and can expect substantial relief.
All concerned are requested to take advantage in all the applicable cases accordingly.