Facts of the case:

In this case, for the assessment year 2018–19, the assessing authority passed assessment order whereby the Input Tax Credit (ITC) claimed by the petitioner was declined. The sole ground for rejection was that the petitioner had failed to file GST returns for the period May 2018 to March 2019 within the time limit prescribed under Section 16(4) of the CGST Act.

The petitioner contended that subsequent to the assessment year in question, Section 16(5) was inserted in the CGST Act. As per this newly introduced provision, ITC could be availed if the relevant returns were furnished on or before 30 November 2021, notwithstanding the limitation prescribed under Section 16(4). It was the petitioner’s case that since the returns for the relevant period were admittedly filed before the cut-off date under Section 16(5), the denial of ITC was unsustainable. On this basis, the present writ petition was filed challenging the assessment order.

Issue:

Whether the petitioner, whose ITC claim was denied solely on account of delay under Section 16(4) of the CGST Act, is entitled to claim the benefit of Section 16(5), notwithstanding an earlier adverse judgment upholding the validity of Section 16(4).

Held that:

It was observed that the present claim was not a reiteration of the earlier constitutional challenge to Section 16(4), but was founded on a subsequently introduced statutory provision, namely Section 16(5) of the CGST Act.

The Court noted that Section 16(5) begins with a non-obstante clause—“notwithstanding anything contained in sub-section (4)”—which clearly indicates the legislative intent to override the limitation prescribed under Section 16(4). Once a taxpayer satisfies the sole condition stipulated in Section 16(5), i.e., filing of returns before 30 November 2021, the time restriction under Section 16(4) becomes irrelevant.

The Court further held that Section 16(5) confers a fresh statutory right and therefore gives rise to a fresh cause of action. Consequently, the dismissal of the earlier writ petition challenging Section 16(4) could not operate as a bar to the present proceedings.

In light of the above, the Court quashed assessment order and directed the second respondent to reconsider the matter afresh after granting the petitioner an opportunity of being heard. The authority was specifically directed to extend the benefit of Section 16(5) to the petitioner, if otherwise eligible under law.

Hence, the Court held in favour of the petitioner and rejected the objection raised by the respondents.

Case Name: PAZHASSI MOTORS Versus STATE OF KERALA and Others dated 04.12.2025

To read the complete judgement 2025 Taxo.online 3343