Facts of the Case:

In this case, the petitioner approached the High Court challenging the assessment order dated 02.04.2024 passed by the respondent Department, whereby the petitioner’s claim of Input Tax Credit (ITC) was reversed and consequential demands towards tax, interest and penalty were confirmed. The reversal was primarily on the ground that the ITC had been availed beyond the time limit prescribed under Section 16(4) of the CGST Act, 2017.

The petitioner contended that the issue raised in the present writ petition stood squarely covered by a common judgment of the same Court dated 17.10.2024 In the said batch, the Court had considered cases where registered persons, despite filing GSTR-1 returns in time, could not file GSTR-3B returns within the prescribed period due to circumstances such as COVID-19 lockdown, financial constraints, health issues and fire accidents, resulting in delayed availment of ITC.

Subsequent to the passing of the impugned assessment orders, significant statutory developments took place. The 53rd GST Council Meeting held on 22.06.2024 recommended extension of the deadline for availing ITC pertaining to FYs 2017-18 to 2020-21. These recommendations culminated in the enactment of the Finance Act (No. 2) of 2024, whereby Section 16 of the CGST Act was amended by insertion of sub-sections (5) and (6) with retrospective effect from 01.07.2017. Notification No. 17/2024-Central Tax dated 27.09.2024 and Circular No. 237/31/2024-GST were thereafter issued clarifying the implementation of the amended provisions.

Both the petitioner and the respondent fairly submitted that, in view of the above developments and the binding precedent, the present writ petition deserved to be disposed of on similar terms.

Issue:

Whether assessment orders reversing Input Tax Credit solely on the ground of limitation under Section 16(4) of the CGST Act could survive in view of the retrospective insertion of Section 16(5), permitting availment of ITC up to 30.11.2021 for invoices pertaining to FYs 2017-18 to 2020-21.

Held that:

The Court reiterated and applied the ratio laid down in its earlier common judgment dated 17.10.2024. It held that Section 16(5), inserted by the Finance Act (No. 2) of 2024 with retrospective effect, clearly overrides Section 16(4) and entitles registered persons to avail ITC pertaining to FYs 2017-18, 2018-19, 2019-20 and 2020-21 in any return filed under Section 39 up to 30.11.2021. Consequently, any reversal of ITC merely on the basis of the earlier limitation prescribed under Section 16(4), without accounting for the retrospective statutory amendment, was rendered legally unsustainable.

The Court further restrained the respondent Department from initiating or continuing any proceedings against the petitioner based solely on the issue of limitation. Directions were issued for de-freezing of the petitioner’s bank account, if frozen pursuant to the impugned order, and for dropping of any recovery proceedings initiated during the pendency of the writ petition.

The Court also clarified that if any amount had already been recovered from the petitioner’s electronic cash ledger or credit ledger pursuant to the impugned order, the same was liable to be refunded or permitted to be adjusted towards future tax liability, subject to law. The High Court allowed the writ petition and quashed the impugned assessment order insofar as it related to reversal of ITC on the ground of limitation under Section 16(4) of the CGST Act.

Case Name: M/s. Selva Vilas Jewellery Represented by its Proprietor S. Karunanandham Versus The Superintendent of GST and Central Excise, Thanjavur dated 07.01.2026.