Legal Win: GST Input Tax Credit Restored as High Court Quashes Assessment Orders, Mandates 25% Tax Deposit

The Madras HC allowed writ petitions challenging GST assessment orders denying input tax credit. The court set aside original and appellate orders, remitting cases back to the assessing officer. Petitioners were directed to deposit 25% of disputed tax, with future resolution contingent on proposed amendments in the Finance (No.2) Bill, 2024. The case was disposed of without costs.

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Issues:
Challenging Assessment Orders denying input tax credit availed beyond statutory period under Section 16(4) of GST Enactments.

Analysis:
In a series of Writ Petitions before the Madras High Court, the petitioners challenged Assessment Orders that sought to deny input tax credit availed beyond the statutory period prescribed under Section 16(4) of the GST Enactments. The issue was common across all the petitions. The petitioners argued against the orders of the Original Authority and the Appellate Authority, which upheld the Assessing Officer's decisions.

The Court noted that certain Assessment Orders and Appellate Authority decisions had been set aside under similar circumstances. The Parliament had introduced proposals in the Finance (No.2) Bill, 2024, extending relief to taxpayers for delays in availing input tax credit for the Assessment Years 2017-2018 up to 2020-2021. The proposed amendments in Clause 114 of the Finance (No.2) Bill, 2024, aimed to amend Section 16(4) of the CGST Act to allow input tax credit for specified financial years until a certain date.

The Court highlighted that the proposed amendments had a rider in Clause 146 of the Finance (No.2) Bill, 2024, which restricted refunds of tax paid or input tax credit reversed if Section 114 had been in force during the relevant times. The Court anticipated similar proposals for the TNGST Act, 2017, following the amendments to the Central Act recommended by the GST Council.

Given the legislative developments, the Court set aside the impugned orders passed by the Original Authority and the Appellate Authority. The cases were remitted back to the Assessing Officer to pass fresh orders strictly in accordance with the Finance Act, 2024, if the proposals in Clauses 114 and 146 of the Finance (No.2) Bill, 2024, were accepted and enacted. The Court directed the petitioners to deposit 25% of the disputed tax, excluding the denied input tax credit, for the demands confirmed in the impugned orders.

In conclusion, the Writ Petitions were disposed of with the specified directions, and no costs were awarded. The connected Miscellaneous Petitions were closed accordingly.

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