Kerala HC Quashes ITC Denial as Section 16(5) Benefit Was Not Considered

Oyster Auto Body Vs State Tax Officer (Kerala High Court)

The Kerala High Court allowed the writ petition filed by a registered taxpayer challenging an order passed under Section 73 of the CGST Act, which had denied input tax credit (ITC) relating to the period from April 2018 to March 2019. The denial was based on the finding that the petitioner had failed to furnish the relevant returns within the time limit prescribed under Section 16(4) of the CGST Act.

The petitioner contended that the impugned order failed to consider the benefit available under Section 16(5) of the CGST Act, a provision introduced subsequently, which permits availment of ITC where the taxpayer furnishes the relevant returns within the cut-off date specified therein, namely 30 November 2021.

The Court examined the impugned order and noted that the returns pertaining to the relevant tax periods had been filed on 31 October 2019 and 20 February 2022. It observed that all the returns had been furnished within the statutory period contemplated under Section 16(5) of the CGST Act. In view of this factual position, the Court held that the petitioner was entitled to claim the benefit arising from the said provision.

Accordingly, the High Court concluded that the matter required reconsideration. The impugned order was quashed, and the first respondent was directed to reconsider the issue by extending the benefit of input tax credit under Section 16(5) of the CGST Act to the petitioner, subject to the petitioner being otherwise eligible for such benefit.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

The petitioner is a registered taxpayer under the provisions of the Central Goods & Services Tax Act, 2017 & Kerala State Goods & Services Tax Act, 2017 (for short “CGST and KSGST Act”). The challenge in this writ petition is against Ext.P1 order passed under Section 73 of the CGST Act, by which the input tax credit claimed by the petitioner, pertaining to the months of April, 2018 to March, 2019 was declined, on the reason that, the petitioner failed to submit the returns within the period stipulated in Section 16 (4) of the CGST Act.

2. Ext.P1 order is challenged by the petitioner by placing reliance upon Section 16 (5) of the CGST Act, which was subsequently introduced, where it is provided that, in cases where, the taxpayer furnishes the return within the cut off date contemplated therein, which is 30.11.2021, such taxpayer would be entitled to claim the input tax credit. In this case, going through Ext.P1 order itself, it is clear that the petitioner had submitted the returns, pertaining to the relevant months, on 31.10.2019 and 20.02.2022. Thus, it is evident that all the returns were submitted within the statutory period contemplated under Section 16 (5) of the CGST Act, and hence, the petitioner is entitled to claim the benefit of the same. In such circumstances, the matter requires reconsideration.

Accordingly, this writ petition is disposed of quashing Ext.P1 order, with a direction to the 1^st respondent to reconsider the matter, by granting the benefit of input tax credit under Section 16 (5) of the CGST Act to the petitioner, if the petitioner is otherwise entitled to.