S. Saravanan Vs Assistant Commissioner (ST) (Madras High Court)
Summary: The Madras High Court considered a writ petition challenging an order dated 23.08.2023 passed under Section 73 read with Section 16(4) of the GST law in relation to Financial Year 2018-2019. The petitioner had filed the return for March 2019 on 30.10.2019, ten days after the prescribed due date of 20.10.2019. Although the return was filed belatedly and the applicable late fee under Section 47 had been paid, the respondent denied the Input Tax Credit (ITC) claimed in the return and consequently levied interest and penalty.
The petitioner relied upon the retrospective insertion of sub-sections (5) and (6) in Section 16 of the CGST Act by the Finance (No. 2) Act, 2024 (Act 15 of 2024). Section 16(5), inserted retrospectively with effect from 01.07.2017, provides a relaxation from the time limit under Section 16(4) for invoices or debit notes pertaining to Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, where the relevant return under Section 39 is filed up to 30.11.2021. The petitioner contended that the case was covered by this extended statutory period. The learned Additional Government Pleader appearing for the Revenue did not dispute the legal position.
The Court noted that the petitioner admittedly filed the relevant return on 30.10.2019, well before the extended statutory cut-off of 30.11.2021. It observed that Parliament had inserted Section 16(5), considering, among other things, that the GST enactment had come into force only in 2017 and dealers were not accustomed to the procedures. The Court reproduced Section 16(5), which operates notwithstanding Section 16(4) and covers ITC pertaining to Financial Years 2017-18 through 2020-21 where the return under Section 39 was filed up to 30.11.2021.
The Court also recorded that Notification No.17 of 2024-Central Tax, dated 27.09.2024 and Circular No.237/31/2024-GST, dated 15.10.2024 were issued in furtherance of the amendment. The Court held that the petitioner was entitled to the benefit of the retrospective amendment, subject to fulfilment of the other statutory requirements for availment of ITC.
The Court relied upon its earlier decision in Sri Ganapathi Pandi Industries vs. The Assistant Commissioner (State Tax), in which the Court had held that the extended period under Section 16(5) would be available to eligible registered persons following the retrospective amendment.
Consequently, the Court found that the impugned order dated 23.08.2023 could not be sustained insofar as the ITC claim was barred under Section 16(4) but fell within the period prescribed by Section 16(5). The order was set aside to that extent. The respondent-Department was restrained from initiating or continuing recovery proceedings against the petitioner on the issue of limitation. The Court further directed that, if any amount had already been recovered from the petitioner pursuant to the impugned assessment order through the cash ledger, credit ledger or any other prescribed mode, the same should be refunded or utilised/adjusted towards future tax. The writ petition was accordingly allowed, with no order as to costs, and the connected miscellaneous petitions were closed.
Cases Discussed
- Sri Ganapathi Pandi Industries vs. The Assistant Commissioner (State Tax) — Madras High Court decision concerning the retrospective amendment to Section 16 and availability of the extended period under Section 16(5).
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This Writ Petition has been filed challenging the impugned order passed by the respondent in GSTIN 33ACGPS4598F2Z8 for the Financial Year 2018-2019 reference No. ZD33082313435FK dated 23.08.2023 under Section 73 read with Section 16 (4) of the Goods and Service Tax Act.
2. The petitioner is a registered taxable person under the relevant provisions of the Goods and Services Act, 2017. It is the case of the petitioner that the petitioner filed its returns for the month of March 2019 on 30.10.2019, with a delay of ten days from the prescribed due date of 20.10.2019. Though the return was filed belatedly, the same was accompanied by the applicable late fee under Section 47 of the Act. However, the respondent denied the ITC availed by the petitioner in the said return and consequently levied interest and penalty.
3. The learned counsel for the petitioner would submit that sub-sections (5) and (6) of Section 16 were inserted by the Finance (No.2) Act, 2024 (Act 15 of 2024) with retrospective effect, providing relaxation in the time limit prescribed for availment of Input Tax Credit in respect of the financial years 2017-18 to 2020-21. In view of the said amendment, the learned counsel submitted that the case of the petitioner is squarely covered under the extended period.
4. The learned Additional Government Pleader (Taxes) appearing for the respondent does not dispute the above legal position.
5. Heard the learned counsel appearing on either side and perused the records.
6. The issue involved in the Writ Petition relates to the belated filing of claim of the Input Tax Credit in the returns. The petitioner for the month of March 2019, ought to have filed returns on or before 20.10.2019. However, the same was filed on 30.10.2019. In view of the belated returns and the belated claim of ITC, the same was disallowed by the respondent. However, considering the fact that new GST enactment came into force only in 2017 and the fact that the dealers were not accustomed to the procedures, the Parliament, in its wisdom inserted subclause (5) to Section 16, enabling the dealer who have filed their returns for financial year 2017-18 to 2020-21 before 30.11.2021, to avail ITC.
7. Section 16(5) of the CGST Act was inserted with retrospective effect from 01.07.2017 by Act 15 of 2024, thereby providing a relaxation in respect of time limit prescribed under Section 16(4) for availment of Input Tax Credit pertaining to the Financial Years 2017-18 to 2020-21. Section 16(5) of the CGST reads as follows:
”Notwithstanding anything contained in sub-section (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered persons shall be entitled to take input tax credit in any return under section 39 which is filed upto the thirtieth day of November, 2021.”
8. In furtherance of the amendment, Notification No.17 of 2024-Central Tax, dated 27.09.2024 and a circular No.237/31/2024-GST, dated 15.10.2024 were also issued.
9. In the present case, the petitioner admittedly filed the relevant return on 30.10.2019, which is well before the extended statutory cut-off date of 30.11.2021 prescribed under Section 16(5). The petitioner is, therefore, entitled to the benefit of the aforesaid retrospective amendment, subject to fulfilment of the other statutory requirements for availment of ITC.
10. This Court, in Sri Ganapathi Pandi Industries vs. The Assistant Commissioner (State Tax) (W.P.No.25081 of 2024 etc. batch) considered the said issue and passed a detailed order holding that, in view of the retrospective amendment to Section 16 of the Act, the benefit of extended period prescribed under Section 16(5) would be available to eligible registered persons.
11. In view of the aforesaid statutory amendment, the impugned order dated 23.08.2023 cannot be sustained and is liable to be set aside. Accordingly, the impugned order is set aside.
12. Therefore, the Writ Petition is allowed on the following terms:
i. The orders impugned is quashed insofar as it relates to the claim made by the petitioner for ITC which is barred by limitation in terms of Section 16 (4) of the CGST Act, 2017 but, within the period prescribed in terms of Section 16 (5) of the said Act.
ii. As a consequence, the respondent-Department is restrained from initiating or continuing with any recovery proceedings against the petitioner by virtue of the impugned order based on the issue of limitation.
iii. It is also made clear that if at all, any amount has been recovered from the petitioner based on the impugned assessment order from the cash ledger/credit ledger of the petitioner or through any other mode of recovery prescribed under the Act, the same shall be refunded to them or utilized/adjusted by the petitioner towards payment of future tax.
No costs. Consequently, connected Miscellaneous Petitions are closed.
