Petitioner's ITC claim denied for late GSTR-3B filing must be reconsidered; rectification application to be decided in 3 weeks

The HC held that the petitioner's claim for input tax credit (ITC) denied due to late filing of GSTR-3B returns requires fresh consideration in light of recent statutory amendments and notifications. The application for rectification filed before the Superintendent, Central GST & Excise, remains pending. The court directed the authority to dispose of the rectification application within three weeks, ensuring compliance with the relevant legal provisions and providing the petitioner an opportunity for personal hearing. The court refrained from adjudicating on the merits and disposed of the petition accordingly.

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ISSUES:

Whether input tax credit erroneously availed after the due date of filing returns under the GST Act can be regularized by retrospective amendment to Section 16 of the GST Act.Whether a registered person is entitled to file an application for rectification of orders passed under Section 73 of the GST Act concerning wrong availment of input tax credit, pursuant to the notification issued under Section 148 of the GST Act.Whether the adjudicating authority is obliged to consider an application for rectification filed electronically or by post in light of the Finance (No.2) Act, 2024 amendments and related notifications and circulars.Whether the adjudicating authority must provide an opportunity of personal hearing before deciding on the rectification application.

RULINGS / HOLDINGS:

The Court recognized that the retrospective amendment to Section 16 of the GST Act by the Finance (No.2) Act, 2024, specifically sub-section (5), entitles the registered person to take input tax credit in any return filed up to 30th November 2021 for invoices relating to financial years 2017-18 to 2020-21, thereby allowing regularization of previously disallowed input tax credit claims.The Court held that the registered person has the statutory right to file an application for rectification of orders passed under Section 73 confirming demand for wrong availment of input tax credit, as per the notification issued under Section 148 of the GST Act, which provides a special procedure for such rectification.The Court directed that the application for rectification, whether filed electronically or by registered post due to technical glitches, must be considered by the adjudicating authority in accordance with law, taking into account the retrospective amendment and the relevant notification and circular.The Court mandated that the adjudicating authority shall provide the petitioner with an opportunity of personal hearing before passing any order on the rectification application.

RATIONALE:

The Court applied the statutory framework under the Central Goods and Services Tax Act, 2017, particularly Section 16 (input tax credit), Section 73 (determination of tax not paid or short paid or erroneously refunded), and Section 148 (power to issue notifications for special procedures).The retrospective insertion of sub-section (5) to Section 16 by the Finance (No.2) Act, 2024, was interpreted as a legislative measure to "obviate irregularity and regularize such technical demand" relating to input tax credit claims for specified financial years.The notification dated 15.10.2024 and Circular No.F. No. CBIC-20001/6/2024-GST clarified procedural aspects, including the right to file rectification applications electronically and the obligation of appellate authorities to consider retrospective amendments when deciding appeals under Section 107.The Court refrained from delving into the merits of the tax liability dispute, emphasizing procedural compliance and due process, including adherence to the conditions stipulated in the notification and circular, and providing an opportunity of hearing.

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