Shiv Construction Company Vs Additional Commissioner (Gujarat High Court)
Gujarat High Court recently reviewed a petition filed by Shiv Construction Company challenging an appellate order that upheld the denial of Input Tax Credit (ITC) claimed by the firm. The dispute originated from an order dated November 21, 2023, passed under Section 73 of the Goods and Services Tax (GST) Act, 2017, which disallowed ITC availed by the petitioner for the financial years 2017-18 and parts of 2018-19. The disallowance was based on the grounds that the GSTR-3B returns claiming this credit were filed after the deadline stipulated under Section 16(4) of the CGST Act.
The petitioner, a firm registered under GST from February 13, 2020, had filed the relevant return under Section 39 on November 30, 2021. An appeal against the original order was dismissed by the Commissioner (Appeals) through an order dated August 12, 2024 (received September 4, 2024). The appellate authority confirmed the violation of Section 16(4), rejecting arguments related to ITC being claimed in books of accounts first, impossibility due to late registration, and challenges to the validity of GSTR-3B as a return for Section 16(4) purposes, citing established jurisprudence including Supreme Court decisions affirming GSTR-3B’s validity.
However, the case took a significant turn due to a legislative development occurring after the appellate authority’s decision. The petitioner brought to the High Court’s attention the insertion of a new sub-section (5) into Section 16 of the CGST Act via the Finance (No. 2) Act, 2024, which was enacted on August 16, 2024. Crucially, this new sub-section was given retrospective effect from July 1, 2017. Section 16(5) creates an exception to the time limit in Section 16(4) for specific financial years.
Section 16(5) states that notwithstanding the provisions of Section 16(4), registered persons are entitled to take ITC for invoices or debit notes pertaining to the financial years 2017-18, 2018-19, 2019-20, and 2020-21, provided the relevant return under Section 39 (like GSTR-3B) was filed by November 30, 2021. Since the petitioner had filed their return precisely on this date, their counsel argued that the alleged default under Section 16(4) was potentially cured by the newly enacted, retrospective Section 16(5). The counsel for the respondent authorities could not dispute the existence and retrospective application of this new provision.
Accepting the petitioner’s argument based on this subsequent legislative change, the Gujarat High Court determined that the foundation of the original and appellate orders, which rested solely on the time bar under Section 16(4), was now subject to the overriding effect of Section 16(5). The court concluded that the matter required reconsideration in light of the new law. Consequently, the High Court quashed and set aside both the original order dated November 21, 2023, and the appellate order dated August 12, 2024. The case was remanded back to the Adjudicating Authority for a fresh (de novo) decision, with specific instructions to consider the impact of Section 16(5) after verifying the facts and providing the petitioner an opportunity of hearing. The Adjudicating Authority was directed to complete this exercise within twelve weeks.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
