Input tax credit entitlement for FYs 2017-21 allowed where claimed within amended timeframe, quashing limitation-based denials.

Entitlement to input tax credit (ITC) for invoices/debit notes relating to FYs 2017-18 to 2020-21 was held to survive the limitation in Section 16(4) because the insertion of Section 16(5) and its implementing notification and circular permit taking ITC in returns filed up to 30.11.2021; therefore orders reversing ITC solely on the ground of the Section 16(4) time bar were set aside to that extent. Consequential reliefs including restraint on proceedings, de-freezing of bank accounts and refund/adjustment directions were granted, while the revenue may pursue non-limitation issues on merits.

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Issues: Whether the petitioner/registered person is entitled to avail input tax credit (ITC) for invoices/debit notes pertaining to FYs 2017-18 to 2020-21 despite the limitation in Section 16(4) of the Central Goods and Services Tax Act, 2017, in view of the amendment by insertion of Section 16(5) and related notifications/circulars.

Analysis: Section 16(4) originally restricted entitlement to take ITC after the thirtieth day of November following the end of the financial year to which the invoice/debit note pertains or furnishing of the relevant annual return, whichever is earlier. Section 16(5) was inserted to provide that, notwithstanding subsection (4), registered persons may take ITC in any return under section 39 filed up to 30.11.2021 for invoices/debit notes pertaining to FYs 2017-18, 2018-19, 2019-20 and 2020-21. The legislative amendment received Presidential assent and was given effect through Finance Act (No.2) of 2024, followed by Notification No.17 of 2024-Central Tax dated 27.09.2024 and Circular No.237/31/2024-GST which implemented and clarified the scope of the amendment. Applying the amended statutory text and the implementing instruments to the facts, the limitation bar in Section 16(4) is displaced in respect of the specified financial years for returns filed up to 30.11.2021, rendering orders that reverse ITC solely on the ground of limitation unsustainable to that extent.

Conclusion: The impugned orders are quashed insofar as they deny the petitioner's claim for ITC for invoices/debit notes pertaining to FYs 2017-18 to 2020-21 where the ITC was availed within the period permitted by Section 16(5) of the Central Goods and Services Tax Act, 2017; consequential reliefs including restraint on proceedings, de-freezing of bank accounts, and refund/adjustment directions are granted, while the respondent retains liberty to proceed on non-limitation issues in accordance with law.

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