ITC claims barred under Section 16(4) but within Section 16(5) period should be allowed, assessment order quashed

HC quashed assessment order reversing ITC claim. Court held that ITC claims barred under Section 16(4) of CGST Act 2017 but falling within Section 16(5) prescribed period should be allowed. Following precedent from Sri Ganapathi Pandi Industries case, HC ruled that petitioner's ITC claim was valid as it met Section 16(5) requirements despite Section 16(4) limitation bar. Writ petition was allowed and impugned order quashed regarding the ITC claim.

---

---

The High Court of Madras considered a Writ petition filed by a taxpayer challenging the orders passed by the tax department reversing their Input Tax Credit (ITC) claim under the Goods and Service Tax Act, 2017 (GST Act)/ Central Goods and Services Tax Act. The issue revolved around the reversal of ITC and the direction to pay tax/penalty/interest. The Court noted that the issue had been addressed in a previous common order of the Court, where it was held that the petitioners, who faced difficulties in filing returns due to various reasons, were entitled to avail ITC within the extended deadline granted by the GST Council.The Court referred to the amendments made to Section 16 of the CGST Act, particularly the insertion of sub-section (5), allowing registered persons to avail ITC for certain financial years until November 30, 2021. Considering these developments, the Court concluded that the impugned orders reversing ITC claims were no longer sustainable and should be quashed. The Court directed the tax department to release frozen bank accounts of the petitioners, refrain from initiating proceedings based on limitation issues, and refund any tax amounts collected based on the impugned orders.Furthermore, the Court granted liberty to the tax department to proceed against the petitioners for other issues such as discrepancies in ITC claims. The Writ petition was allowed, and no costs were imposed.In summary, the Court held that the petitioners were entitled to avail ITC within the extended deadline provided by the GST Council, and the impugned orders reversing ITC claims were quashed. The tax department was directed to take necessary steps to release frozen bank accounts and refund any collected tax amounts. The Court granted liberty to the tax department to proceed on other issues and closed the connected Miscellaneous Petitions.

---