Entitlement to Input Tax Credit: retrospective amendment enables fresh adjudication and quashes prior order, remits for reconsideration.

Insertion of retrospective provisions altering Section 16(5) and 16(6) by SO 4253(E) clarifies entitlement to Input Tax Credit and operates to invalidate prior adverse adjudications; consequence is quashing of the impugned order and remittal for fresh decision on merits. The statutory amendment applied from 01.07.2017 requires the claimant to substantiate Input Tax Credit claims with supporting documents, and mandates reconsideration by the revenue authority expeditiously in light of the notification. The remedy proceeds by writ disposal culminating in remit for fresh adjudication rather than a final grant on merits.

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Issues: (i) Whether the impugned Order-in-Original confirming demand under the GST can be quashed and the matter remitted for fresh consideration in view of the retrospective insertion of Section 16(5) and 16(6) by Finance (No.2) Act, 2024.

Analysis: The Court noted that the statutory position has changed by the retrospective insertion of Section 16(5) and 16(6) with effect from 01.07.2017 by Finance (No.2) Act, 2024 and the issue is thereby covered in favour of the petitioner. In light of this statutory intervention, the Court found it appropriate to set aside the impugned order and remit the matter to the respondent for fresh adjudication on merits, permitting the petitioner to file an application for rectification and to substantiate entitlement to Input Tax Credit with relevant documents. The respondent was directed to pass appropriate rectification orders without reference to limitation and to refund or re-credit any amounts if proceedings are dropped.

Conclusion: The impugned Order-in-Original is quashed and the matter is remitted to the respondent for fresh decision on merits in accordance with the retrospective statutory amendments; the petitioner is permitted to apply for rectification and to substantiate the claim for Input Tax Credit; if proceedings are dropped, amounts are to be refunded or re-credited in the electronic cash ledger in favour of the petitioner.

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