Retrospective GST amendment on input tax credit limitation overrides prior time-bar denial and nullifies recovery based on Section 16(4).

Retrospective insertion of Section 16(5) of the CGST Act altered the limitation position for input tax credit claims relating to the specified financial years, allowing registered persons to claim credit where the return under Section 39 was filed up to 30.11.2021. In light of the amendment's effect from 01.07.2017, along with the connected notification and circular, denial of input tax credit solely on the basis of Section 16(4) limitation could not be sustained. The impugned order was quashed to that extent, and consequential relief followed, including restraint on further recovery steps, de-freezing of the bank account, and refund or adjustment of amounts already collected.

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Issues: Whether the denial of input tax credit on the ground of limitation could be sustained after the insertion of Section 16(5) of the Central Goods and Services Tax Act, 2017 with retrospective effect, and whether the consequential impugned order could stand.

Analysis: The claim of input tax credit was earlier treated as time-barred under Section 16(4) of the Central Goods and Services Tax Act, 2017. The subsequent statutory amendment inserted Section 16(5), which entitled registered persons to take input tax credit in respect of invoices or debit notes pertaining to the specified financial years where the return under Section 39 was filed up to 30.11.2021. In light of the retrospective effect given to the amendment from 01.07.2017 and the connected notification and circular, the limitation-based denial of input tax credit could not be sustained.

Conclusion: The impugned order was quashed insofar as it rejected the input tax credit claim on limitation grounds, and the Department was restrained from proceeding further on that basis. Consequential directions were also issued for de-freezing the bank account, dropping recovery action, and refund or adjustment of amounts already collected.

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