No Reversal of ITC Due to Delayed Submission Under U/S 16(4); When GSTR-2 Form Not Notified Madras High Court

Introduction: In a recent ruling by the Madras High Court (Case: Kavi Kavin HP Gas Gramin Vitrak and Vitrak Transport Company LLC Vs the Commissioner of Commercial Taxes (W.P(MD).Nos.7173 and 7174 of 2023), a crucial issue surrounding the Input Tax Credit (ITC) and delayed submissions under Section 16(4) of the Goods and Services Tax (GST) Act came into focus.

Case Summary: .

Issue: Due to technical restrictions in the GSTN portal, a business petitioner was unable to claim input tax credit (ITC).

Facts: Whilst filing monthly returns physically due to financial restrictions and not paying taxes on outward supplies.

GSTN’s portal did not support online GSTR-3B filing for unpaid taxes, making claiming ITC through Form GSTR-2 (the prescribed form) impossible as this form wasn’t readily available online.

The department denied ITC on account of late GSTR-3B filing.

Petitioner’s Arguments:

Claiming ITC through GSTR-2 is mandatory but no form was ever released to claim ITC; GSTR-3B should only be used to avail of ITC, not claim it; so filing a late GSTR-3B form under Section 16(4) doesn’t work towards this end either.

Petitioner successfully reported and paid taxes, making their claim valid. Court Judgement:

The action taken by the department was unlawful as its actions relied upon non-existent forms, making their actions legally untenable; additionally, GSTN’s restriction of online GSTR-3B for unpaid taxes caused practical difficulty for petitioners claiming back taxes due.

Dealers should be allowed manual filing until GSTN resolves its issues, according to similar court judgements which allowed for manual filing when portals are inoperable or lack mechanisms that enable filing. Directed department to accept petitioner’s manual returns and consider belated claims with no prejudice as they were filed manually with them without prejudice for processing ITC claims without delay or prejudice.

Decision: The Court subsequently directed respondents to permit petitioner to file manual returns, accept belated returns if in order, and allow any claim for ITC on outward supply/sales without prejudice due to lack of an enabling mechanism. Furthermore, their impugned order was set aside and their writ petitions granted.


In conclusion, the Madras High Court’s ruling in the case of Kavi Kavin HP Gas Gramin Vitrak brings attention to the practical challenges faced by businesses due to technical issues in the GSTN portal. The decision underscores the need for flexibility, allowing manual filing in circumstances where online mechanisms are impractical or lack essential functionalities. This judgment serves as a safeguard for businesses, ensuring their rightful claims for ITC are not unfairly denied due to system limitations.

Author Bio

Qualification: CA/CS
Company: Law Legends
Location: indore, Madhya Pradesh, India
Member Since: 06 Jun 2023 | Total Posts: 3
Law Legends basically helps CA,s,tax consultants, accountants for doing smart work. It is an eminent app with 100% accuracy. The app includes video library, articles, recent updates and query solutions. View Full Profile

My Published Posts

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Telegram

taxguru on telegram GROUP LINK

Download our App


More Under Goods and Services Tax

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

February 2024