Retrospective ITC amendment under the CGST Act required fresh reassessment of a time-limit based disallowance.

Input tax credit disallowance based on the time limit in section 16(4) of the CGST Act required reconsideration after section 118 of the Finance (No. 2) Act, 2024 inserted sub-sections (5) and (6) into section 16 with retrospective effect from 1 July 2017. The amended framework extended ITC eligibility for specified financial years up to the prescribed return filing date, so the assessment could not be sustained on the earlier basis without fresh examination. The assessment was set aside and remitted for reconsideration in light of the amended provision.

---

---

Issues: Whether the disallowance of input tax credit on the basis of the time limit under section 16(4) could survive after the insertion of sub-sections (5) and (6) into section 16 of the Central Goods and Services Tax Act, 2017 by section 118 of the Finance (No. 2) Act, 2024, and whether the assessment required reconsideration in light of the amendment.

Analysis: The amendment inserted sub-sections (5) and (6) into section 16 with retrospective effect from 1 July 2017 and specifically extended eligibility for input tax credit in respect of specified financial years up to the prescribed return filing date. In light of the amended statutory framework, the basis on which the impugned assessment had disallowed credit required fresh examination. The respondent also indicated that the assessment would be redone taking the Finance (No. 2) Act, 2024 into account.

Conclusion: The disallowance could not be sustained without reconsideration under the amended provision, and the assessment was set aside for fresh determination. The result is in favour of the petitioner, with the matter remitted for reassessment.

---