Input tax credit denial under GST must be reconsidered where section 16(5) applies, with fresh hearing required.

Denial of input tax credit under the GST enactments based solely on section 16(4) could not be sustained where section 16(5) had come into force and required consideration. The High Court held that the claim had to be re-examined on that statutory basis, and the competent authority was directed to reconsider the matter after granting the assessee an opportunity of hearing. The order was therefore set aside to the extent it rested on section 16(4), and the issue was remitted for fresh adjudication in light of section 16(5).

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Issues: Whether the order denying input tax credit under section 16(4) of the GST enactments required interference in view of section 16(5), and whether the matter should be reconsidered by the competent authority.

Analysis: The petitioner challenged the denial of input tax credit for the relevant financial year on the basis that section 16(5) had been brought into force. The Court accepted that this contention required consideration and that the impugned order could not stand to the extent it denied credit solely on the basis of section 16(4). The Court also directed the competent authority to reassess the claim after considering section 16(5) and after affording an opportunity of hearing.

Conclusion: The denial of input tax credit to the extent founded on section 16(4) was set aside and the matter was remitted for fresh consideration in the light of section 16(5) and after hearing the petitioner.

Final Conclusion: The petitioner obtained partial relief, with the adverse part of the order set aside and the claim sent back for fresh decision by the authority.

Ratio Decidendi: Where a subsequent statutory provision is relied upon as affecting entitlement to input tax credit, the authority must reconsider the claim on that basis and cannot sustain the denial without fresh adjudication after hearing the affected party.

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