Retrospective GST amendment allowed input tax credit despite delayed returns and triggered refund of interest and penalty collected.

Retrospective insertion of section 16(5) of the CGST Act, effective from 01.07.2017, was applied to treat the relevant return-filing period under section 39 as extended for financial year 2019-20. On that basis, delayed filing alone could not sustain denial of input tax credit, so the credit was allowed. The interest and penalty levied only because of the delay were also held refundable, with interest at 6% per annum from the date of collection until repayment.

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Issues: Whether the petitioner was entitled to input tax credit for the financial year 2019-20 in view of the retrospective insertion of section 16(5) of the Central Goods and Services Tax Act, 2017, and whether the interest and penalty levied for delayed filing of returns were liable to be refunded.

Analysis: By virtue of clause (5) of section 16 inserted by the Finance (No. 2) Act, 2024 with effect from 01.07.2017, the period for filing returns prescribed under section 39 of the Central Goods and Services Tax Act, 2017 stood extended for the relevant years. The petitioner's delayed returns for financial year 2019-20 were therefore covered by the amended provision, and the disallowance of input tax credit on the sole ground of delay could not survive. Consequential levy of interest and penalty on that basis also required refund.

Conclusion: The petitioner was held entitled to take the input tax credit, and the respondents were directed to refund the interest and penalty collected, with interest at 6% per annum from the date of collection till repayment.

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