Writ petition allowed on GST input tax credit claims under Section 16 CGST Act amendments

HC allowed writ petition challenging GST proceedings related to input tax credit claims. Court held that Finance (No. 2) Act, 2024 amendments to Section 16 of CGST Act, with retrospective effect from 01.07.2017, entitled petitioner to claim input tax credit for financial years 2017-18 to 2020-21 until 30th November 2021. The show-cause notice dated 15.02.2024 became redundant due to statutory amendments. HC set aside impugned order dated 02.03.2024 and remanded matter to jurisdictional officer for appropriate orders. Petition disposed through remand.

---

---

Issues Involved:

1. Extension of due dates under Section 73 of the CGST/AGST Act, 2017 due to Covid-19 Pandemic.
2. Invocation of Section 168A of the CGST Act, 2017 for "force majeure" conditions.
3. Issuance of show-cause notice and subsequent order against the petitioner.
4. Amendments to Section 16 of the CGST Act, 2017 by the Finance (No. 2) Act, 2024.
5. Entitlement of the petitioner to input tax credit.

Detailed Analysis:

1. Extension of Due Dates Under Section 73:

The petitioner challenged the extension of due dates for issuing orders under Section 73 of the CGST/AGST Act, 2017, which were extended due to the Covid-19 Pandemic. Initially, the due date for filing the annual return for the financial year 2017-18 was extended to 31.01.2020, and further to 07.02.2020 for the State of Assam. The petitioner argued that the Covid-19 Pandemic ended in 2022, and there was no justification for extending the due dates up to 31.12.2023.

2. Invocation of Section 168A for "Force Majeure" Conditions:

The government invoked Section 168A of the CGST Act, 2017, which allows for the extension of time limits under special circumstances, including "force majeure" conditions. The petitioner contended that the invocation of Section 168A was not bona fide, as the Covid-19 Pandemic did not persist beyond 2022. The petitioner argued that the extensions were unjustified and lacked proper reasoning beyond the "force majeure" condition.

3. Issuance of Show-Cause Notice and Subsequent Order:

The petitioner received a show-cause notice alleging the availing of ineligible input tax credit (ITC) for the financial year 2018-19, amounting to Rs. 57,32,849/-. Despite submitting a reply, the authorities confirmed a demand of Rs. 1,14,65,698/- against the petitioner. The petitioner challenged the show-cause notice and the order, arguing that the extensions were improperly invoked.

4. Amendments to Section 16 by Finance (No. 2) Act, 2024:

The GST Council decided on amendments to Section 16 of the CGST Act, 2017, effective from 27.09.2024. These amendments allowed registered persons to claim input tax credit for invoices or debit notes pertaining to financial years 2017-18 to 2020-21, filed up to 30th November 2021. The amendments also provided conditions under which input tax credit could be claimed if registration was canceled and subsequently revoked.

5. Entitlement to Input Tax Credit:

The court concluded that the amendments rendered the petitioner's challenge redundant, as the petitioner was entitled to claim input tax credit subject to the conditions in the newly inserted Sections 16 (5) and 16 (6) of the CGST Act, 2017. Consequently, the show-cause notice and order against the petitioner were set aside, and the matter was remanded to the competent jurisdictional officer for appropriate action.

Conclusion:

The writ petition was disposed of in light of the amendments brought by the Finance (No. 2) Act, 2024, which provided retrospective entitlement to input tax credit for the petitioner. The court set aside the impugned order and remanded the matter to the jurisdictional officer to pass necessary orders.

---