Kerala HC Orders Reconsideration of ITC Denied for Late GST Returns

A. R. Thaha Muhammed Vs Assistant State Tax Officer (Kerala High Court)

Summary: The petitioner, a registered taxpayer under the CGST/KGST Act, challenged an Order-in-Original for assessment year 2019-2020. The assessing authority identified two discrepancies: belated payment of tax on certain outward supplies, giving rise to interest under Section 50, and filing of returns for April 2019 through March 2020 beyond the time specified in Section 16(4), leading it to deny input tax credit for that period. The petitioner did not dispute the interest liability and stated that he was prepared to pay it. His challenge was confined to the denial of credit. He relied on Section 16(5), under which a taxpayer who furnishes the relevant return by 30.11.2021 may claim input tax credit. The Court examined the Ext.P2 series of returns and recorded that all the returns had been submitted on 28.12.2020 and 13.04.2021, within the date specified in Section 16(5). It therefore held that interference with the denial of credit was required.

The Kerala High Court quashed Ext.P1 only insofar as it denied input tax credit under Section 16(4). It directed the assessing officer to reconsider the matter and grant the benefit of input tax credit under Section 16(5) if the petitioner is otherwise entitled. The direction leaves the assessment of the other conditions for credit to the assessing officer; the petitioner’s acceptance of the separate interest liability was recorded without that portion of the order being quashed.