2025 (8) TMI 1329 - HC - GST

Section 16(5) extends FY 2018-19 return deadline to Nov 30, 2021, prima facie ITC rejection unsustainable; pre-deposit waived

Heal Health Connect Solutions Private Limited Through Its Director Mr Divya Srivastava Versus The Commissioner Delhi Goods And Services Tax And Ors.

HC held that for FY 2018-19 Section 16(5) extends the return-filing period to 30 Nov 2021, rendering the impugned rejection of ITC prima facie ... Challenge to validity of N/N. 09/2023 Central Tax dated 31st March, 2023 - rejection of ITC for filing of the return beyond the prescribed period - Petitioner submits that the Petitioner is willing to avail the appellate remedy, but the pre-deposit may be waived, as the Petitioner is entitled to substantial amount of ITC - HELD THAT:- A bare perusal of the reasoning makes it clear that the relevant financial year in the present case is FY 2018-19 and Section 16(5) clearly extends the period for filing returns up till 30th November, 2021. The reasoning given is therefore, prima facie not sustainable However, the Court would not like to make a final order, as the entire order is an appealable order. In the unique facts of this case, where prima facie, the Court is of the view that the Petitioner is entitled to credit/refund of ITC, the pre-deposit is waived. Petition disposed off. ISSUES PRESENTED AND CONSIDERED 1. Whether, for invoices/debit notes pertaining to Financial Year 2018-19, a registered person is entitled to take input tax credit (ITC) in respect of returns filed after the due date specified in Section 16(4) of the Central Goods and Services Tax Act, 2017 (the Act), by virtue of the proviso contained in Section 16(5) (limitation extended till 30th November, 2021). 2. Whether the adjudicating authority's disallowance of ITC claimed for February 2019 and March 2019 on the ground of Section 16(4) is sustainable in view of the amendment embodied in Section 16(5), and whether such reasoning can support a demand. 3. Whether the Petitioner must be relegated to the appellate remedy under Section 107 of the Act and, if so, whether the usual requirement of pre-deposit should be imposed or waived in the circumstances. 4. Ancillary administrative reliefs in the context of an appeal: (a) access to the electronic portal and documents required for filing an appeal; (b) protection against dismissal on limitation grounds if appeal is filed within the stipulated period; and (c) effect of any pending higher court decision on the appellate outcome. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Legal framework for entitlement to ITC: applicability of Section 16(4) vis-à-vis Section 16(5) Legal framework: Section 16(1) entitles registered persons to take input tax credit subject to conditions; Section 16(4) prescribes that ITC shall not be available after the thirtieth day of November following the end of the financial year to which the invoice pertains or furnishing of the relevant annual return, whichever is earlier; Section 16(5) (amendment) expressly provides that, notwithstanding subsection (4), for invoices/debit notes pertaining to Financial Years 2017-18, 2018-19, 2019-20 and 2020-21 a registered person shall be entitled to take ITC in any return under Section 39 filed up to 30th November, 2021. Precedent Treatment: The Court did not rely on or distinguish any prior judicial precedent in its reasoning; it proceeded on textual interpretation of statutory amendment. Interpretation and reasoning: The amendment in Section 16(5) unambiguously extends the limitation period for the specified financial years to 30th November, 2021. For Financial Year 2018-19 the amendment operates 'notwithstanding anything contained in subsection (4)', thereby overriding the limitation effect of subsection (4) for the specified years. The returns/invoices for February and March 2019 fall within Financial Year 2018-19; therefore, if returns claiming the ITC were filed on or before 30th November, 2021, entitlement arises under Section 16(5). Ratio vs. Obiter: Ratio - the statutory text of Section 16(5) extends the period for taking ITC for FY 2018-19 and thus, prima facie, precludes disallowance solely on the basis of subsection (4) where returns were filed within the extended period. Obiter - no extensive analysis of collateral facts, supplier uploads or reconciliation obligations was conducted; those issues remain open for adjudication. Conclusions: The adjudicating authority's reliance on Section 16(4) to disallow ITC for February and March 2019 is prima facie not sustainable because Section 16(5) extends the period for claiming ITC for FY 2018-19 till 30th November, 2021. The Court expresses a prima facie view in favour of entitlement but refrains from making a final adjudication on merits. Issue 2 - Validity of the demand/order based on non-reconciliation and timing of return filing Legal framework: The SCN and demand rely on (i) reconciliation between GSTR-01 and GSTR-3B, (ii) excess ITC claimed due to non-reconciliation, and (iii) excess ITC availed in GSTR-3B compared to suppliers' declarations; Section 16 provisions govern entitlement and limitation. Precedent Treatment: No precedents were invoked; the Court limited itself to statutory interpretation and the record before it. Interpretation and reasoning: The impugned order initially raised reconciliation and timing objections, but the order under challenge dropped the reconciliation ground; the adjudicating authority's primary stated basis for demand in the order excerpt relied upon the limitation date under subsection (4) (20 October 2019 for certain returns) and noted that ITC was availed after that date. Given Section 16(5)'s express extension, that reasoning is prima facie unsustainable for FY 2018-19. The Court, however, declined to substitute its final decision for the appellate process and left factual/contention issues open for the appellate authority to decide on merits. Ratio vs. Obiter: Ratio - a demand based solely on subsection (4) limitation, without considering subsection (5)'s express extension, cannot stand prima facie for FY 2018-19. Obiter - the Court's statement that other contentions and rights are left open, and that the appellate authority must decide without being bound by the Court's observations. Conclusions: The demand insofar as it rests on disallowance under Section 16(4) for FY 2018-19 is prima facie unsustainable; factual and reconciliatory issues remain for adjudication on appeal. Issue 3 - Availability of appellate remedy under Section 107 and waiver of pre-deposit Legal framework: Orders of the adjudicating authority are appealable under Section 107 of the Act; statutory appellate procedure ordinarily requires pre-deposit for filing appeal as a condition precedent to maintainability (subject to provisions/exceptions in law and rules). Precedent Treatment: The Court did not cite or rely upon precedent; it applied principles of appellate deference and interim equitable relief when the appellant appears prima facie entitled to substantial relief. Interpretation and reasoning: The Court acknowledged that the order is appealable and that the Petitioner should ordinarily be relegated to the appellate remedy. Given the Court's prima facie conclusion that the Petitioner is entitled to the ITC (or refund), and the substantial nature of the ITC claimed, the Court exercised its equitable discretion to waive the pre-deposit in the unique facts of the matter to permit effective access to appellate remedy. Ratio vs. Obiter: Ratio - where a court forms a prima facie view that the appellant is entitled to substantial relief, it may, in appropriate circumstances, waive the pre-deposit requirement to allow lodging and adjudication of the appeal on merits. Obiter - the scope and applicability of such waiver in other factual matrices is not addressed. Conclusions: The Petitioner is relegated to file the statutory appeal under Section 107; in the present facts the pre-deposit is waived. All substantive rights and contentions remain open for adjudication by the Appellate Authority. Issue 4 - Ancillary administrative directions and effect of pending higher court decision Legal framework: Administrative facilitation for filing appeals (portal access, document retrieval) and principles preventing dismissal of appeals on limitation where the Court grants a specific period; appellate decisions remain subject to higher court pronouncements. Precedent Treatment: None cited; directions given as case-specific relief aimed at effective exercise of appellate rights. Interpretation and reasoning: To enable the effective filing and adjudication of the appeal, the Court directed that portal access be provided within one week for document download, that an appeal filed within the stipulated period shall not be dismissed on limitation grounds, and that the Appellate Authority shall decide the appeal on merits without being influenced by the Court's interim observations. The Court also clarified that the Appellate Authority's decision will be subject to the outcome of a pending Supreme Court matter that addresses related issues. Ratio vs. Obiter: Ratio - administrative directions to enable appeal (portal access, non-dismissal on limitation) are appropriate where pre-deposit is waived and the Court has formed a prima facie view in favour of the appellant. Obiter - the interplay between the present order and the pending higher court decision is acknowledged but not resolved. Conclusions: Procedural reliefs were granted (portal access, protection against dismissal on limitation) and the appellate authority was directed to adjudicate the appeal on merits, subject to any future binding pronouncement of the higher court in the pending matter.