Input tax credit limitation under Section 16(5) required fresh consideration after the earlier filing deadline basis changed.

Input tax credit denial based on late filing of GSTR-3B under the earlier time limit had to be reconsidered after the later extension under Section 16(5) of the CGST/SGST regime. As the impugned assessment did not account for the extended limitation and the taxpayer was entitled to be heard afresh, the demand and penalty could not be sustained on the existing record. The order was set aside and the matter remitted for fresh consideration in light of Section 16(5).

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Issues: Whether the order denying input tax credit and imposing demand and penalty for the period 2018-19 could be sustained in view of the extended time limit under Section 16(5) of the CGST/SGST regime.

Analysis: The denial of input tax credit rested on the assessee having filed GSTR-3B after the time limit then applicable under Section 16(4). The subsequent extension of time under Section 16(5) required the return filings to be reconsidered, because the later provision could materially affect the factual and legal basis on which the demand and penalty were levied. Since the impugned order did not take account of the extended limitation and the petitioner had to be heard afresh, the existing assessment could not be sustained as it stood.

Conclusion: The impugned order was set aside and the matter was remitted for fresh consideration after taking note of Section 16(5) and after affording the petitioner an opportunity of hearing.

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