Input tax credit denial under GST required fresh reconsideration in light of section 16(5) and hearing the taxpayer.

Denial of input tax credit under section 16(4) of the CGST/SGST Acts was challenged on the basis that section 16(5) might extend the petitioner's entitlement for the 2018-19 period. The High Court noted that the rejection order could not stand without examining the effect of section 16(5), and the competent authority was required to reconsider the claim after giving the petitioner an opportunity of hearing. The impugned denial was therefore set aside to that extent, and the credit claim was directed to be decided afresh in light of section 16(5).

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Issues: Whether the denial of input tax credit under section 16(4) of the CGST/SGST Acts could be sustained in view of section 16(5) of the CGST/SGST Acts, and whether the matter required fresh consideration by the competent authority.

Analysis: The petitioner's claim to input tax credit for the financial year 2018-19 had been rejected by the impugned order on the footing of section 16(4) of the CGST/SGST Acts. The Court took note of the contention that, after notification of section 16(5), the petitioner would be entitled to the benefit of input tax credit. In that backdrop, the impugned rejection could not be retained without reconsideration of the effect of section 16(5), and the competent authority was required to re-examine the claim after hearing the petitioner.

Conclusion: The denial of input tax credit under section 16(4) was set aside to that extent, and the matter was directed to be decided afresh after considering section 16(5) and after affording an opportunity of hearing.

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