Retrospective GST credit extension does not revive reversed input tax credit and is treated as a barred refund.

A retrospective insertion of section 16(5) in the GST Act extends the time limit for availing input tax credit, but it does not override the substantive conditions in section 16(2) or automatically revive credit already reversed on the facts. Where credit was earlier availed and then reversed because the entitlement conditions were not satisfied, the amendment does not create a fresh right to restore that credit. The requested re-availment of reversed input tax credit is also treated as a barred refund under section 150 of the Finance (No. 2) Act, 2024, on a broad reading of the statutory bar against refund of reversed credit.

---

---

Issues: (i) Whether the retrospective insertion of sub-section (5) in section 16 of the GST Act entitled the applicant to reclaim input tax credit earlier reversed for invoices pertaining to January to March 2020; (ii) Whether such reclaim of reversed input tax credit amounted to a refund barred by section 150 of the Finance (No. 2) Act, 2024.

Issue (i): Whether the retrospective insertion of sub-section (5) in section 16 of the GST Act entitled the applicant to reclaim input tax credit earlier reversed for invoices pertaining to January to March 2020.

Analysis: Section 16(5) was inserted to override the time restriction in section 16(4) for specified financial years, but it did not dispense with the substantive conditions in section 16(2). The applicant had already availed credit in the relevant returns within the time then permitted, and the earlier reversal was made because the supplier's compliance had not satisfied the governing conditions as then understood. The amendment did not create a fresh entitlement to restore credit that had already been reversed on the facts of the case.

Conclusion: The applicant is not entitled to reclaim the reversed input tax credit on the strength of section 16(5).

Issue (ii): Whether such reclaim of reversed input tax credit amounted to a refund barred by section 150 of the Finance (No. 2) Act, 2024.

Analysis: The reclaim of credit reversed pursuant to the earlier ruling was treated as the practical equivalent of a refund of input tax credit. The expression used in section 150 was read broadly so that a narrow construction confined to section 54 of the GST Act would render the reference to reversed credit ineffective and lead to an unreasonable result. The statutory bar therefore applied.

Conclusion: The reclaim of the reversed input tax credit is hit by section 150 and is not permissible.

Final Conclusion: The retrospective amendment did not revive the applicant's reversed credit, and the requested re-availment remains impermissible under the statutory bar on refund of reversed input tax credit.

Ratio Decidendi: A retrospective extension of the time limit for availing input tax credit does not, by itself, revive credit already reversed where the substantive conditions for entitlement remain unfulfilled, and re-availment of such reversed credit is treated as a barred refund when the statute expressly excludes refund of input tax credit reversed.

---