Retrospective input tax credit amendment led to setting aside of rejection order and fresh reconsideration under GST law.

The Gauhati HC dealt with rejection of input tax credit claimed under the CGST Act, read with the IGST Act and the relevant State GST law, where the claim had been disallowed under section 16(4). During the writ proceedings, section 16(5) was retrospectively inserted to extend ITC entitlement for specified financial years up to the prescribed return date, and the respondents accepted that the grievance was thereby redressed. The impugned rejection order was set aside, and the respondent authorities were directed to reconsider the claim and pass a fresh order in light of section 16(5).

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Issues: Whether the rejection of the petitioner's claim for input tax credit was required to be set aside in view of the retrospective insertion of sub-section (5) in section 16 of the Central Goods and Services Tax Act, 2017, and whether the matter required reconsideration by the respondent authorities.

Analysis: The challenge arose from rejection of the petitioner's ITC claim on the basis of section 16(4) of the Central Goods and Services Tax Act, 2017, read with section 20 of the Integrated Goods and Services Tax Act, 2017 and the applicable State GST enactment. During pendency of the writ petition, sub-section (5) was inserted in section 16 of the Central Goods and Services Tax Act, 2017 with retrospective effect, extending entitlement to take ITC for the specified financial years up to the prescribed return date. In view of the amendment, the respondents accepted that the grievance stood redressed, and the petitioner sought setting aside of the impugned order and reconsideration in the light of the amended provision.

Conclusion: The impugned order rejecting the ITC claim was set aside, and the respondent authorities were directed to pass a fresh order taking into account section 16(5) of the Central Goods and Services Tax Act, 2017.

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