CGST Act | Once Returns Are Filed Within Time Period U/S 16(5), Limitation U/S 16(4) Loses Significance: Kerala High Court Allows ITC Claim

Section 16(4) of the Central Goods and Services Tax Act, 2017 specifies that no registered person can take Input Tax Credit (ITC) for any invoice or debit note issued against the supply of goods or services after the due date for filing the return for November of the next financial year, or the actual date of filing the annual return for that year.

Section 16(5) of the Central Goods and Services Tax Act, 2017 is a new provision, inserted retrospectively from July 1, 2017, to provide relief to taxpayers by extending the time limit for claiming Input Tax Credit (ITC) for specific financial years.

Justice Ziyad Rahman A.A. stated that ……..Section 16(5) starts with the wording “notwithstanding anything contained in Subsection 4.” This would indicate that, once the taxpayer submits the return within the period stipulated in Section 16(5), the time limit contemplated under Section 16(4) of the CGST loses its significance.

In this case, the assessee/petitioner was aggrieved by the order of assessment pertaining to the year 2018-19, in which the input tax credit claimed by the assessee was declined.

The reason for rejecting the claim was that the assessee failed to submit the returns pertaining to the months of May 2018 to March 2019 within the period stipulated under Section 16(4) of the CGST Act.

The case of the assessee was that, in view of Section 16(5), which was subsequently introduced in the CGST Act, the assessee is entitled to get the input tax credit, in view of the fact that the assessee had submitted the returns pertaining to the relevant period before the cut-off date contemplated under Section 16(5) of the Act.

The department argued that the assessee had earlier submitted a writ petition, before the Court, challenging the constitutional validity of Section 16(4) of the CGST Act, and as per the common judgment, the Court rejected the said contention, and the writ petitions were dismissed.

The department pointed out that the assessee cannot claim the relief in this writ petition without seeking the modification in the said judgment either by challenging or seeking review of the same.

The bench disagreed with the department and stated that the claim now raised by the assessee is based on a statutory provision introduced later, which specifically provides for input tax credit, subject to the condition that the returns are filed before November 30, 2021.

Apart from the fact that the returns are to be filed within the said cut-off date, no other conditions are imposed in Section 16(5), and it is also a relevant aspect to notice that Section 16(5) starts with the wording “notwithstanding anything contained in Subsection 4.” This would indicate that, once the tax payer submits the return within the period stipulated in Section 16(5), the time limit contemplated under Section 16(4) of the CGST loses its significance. Therefore, this being a separate statutory provision subsequently introduced, it amounts to a fresh cause of action for the assessee to claim the relief sought in this writ petition, stated the bench.

The bench stated that the assessee had earlier approached the Court, challenging Section 16(4) of the CGST Act, and received an adverse order; this cannot be a reason not to entertain the writ petition.

The bench opined that the assessee is entitled to the benefit of Section 16(5) of the CGST Act.

In view of the above, the bench allowed the petition.

Case Title: Pazhassi Motors v. State of Kerala

Case Number: WP(C) NO. 45451 OF 2025

Citation: 2025 LiveLaw (Ker) 829

Counsel for Petitioner/Assessee: R. Jaikrishna, Kum. Narayani Harikrishnan, C.S. Arun Shankar, Anish P., Akhil Shaji, K. Suresh Chandran

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