Top Stories S. 16(5) of CGST Allows Delayed ITC for A.Y. 2018-19 to 2020-21 if returns Filed by Nov 30, 2021: Karnataka HC Remands Matter [Rad Order] Considering the Amendment in Financial (No.2) Act, 2024, the Karnataka HC remands the Delayed ITC matter for reconsideration By Kavi Priya – On November 13, 2024 8:10 pm – 2 mins read In a recent ruling, the Karnataka High Court remanded the delayed Input Tax Credit (ITC) claim matter for reconsideration citing Section 16(5) of the Central Goods and Services Tax (CGST) Act as amended by the Finance (No.2) Act, 2024.

This provision allows taxpayers to claim ITC for Assessment Years 2018-19 to 2020-21 if returns were filed by November 30, 2021. Emmar Project Contractors India (P) Limited, the petitioner is a company engaged in construction and related services. The petitioner claimed Input Tax Credit (ITC) under the Central Goods and Services Tax (CGST) and Karnataka Goods and Services Tax (KGST) Acts for the assessment years 2018-19 to 2020-21. Due to procedural and timing issues, the petitioner submitted the ITC claim beyond the deadlines initially mandated by GST laws.

The Assistant Commissioner of Commercial Taxes issued a recovery notice under Section 73 of the Karnataka Goods and Services Tax (KGST) Act, which deals with demand and recovery for unpaid tax without intent to defraud. Get a Copy of Master GST – Expert-Led Courses for Ambitious Professionals, Click here The notice demanded recovery of ITC for the tax periods, along with interest and penalties due to the petitioner’s failure to submit ITC claims within the limitation. An assessment order was issued rejecting the petitioner’s ITC claims and imposing an additional liability. Aggrieved, the petitioner challenged the recovery notice and the assessment order before the Karnataka High Court arguing that the ITC should be allowed despite the delay due to recent legal changes under the Finance (No.2) Act, 2024.

The petitioner’s counsel argued that Section 16(5) of the CGST introduced by Section 118 of the Finance (No.2) Act, 2024, retroactively extended the time limit for availing ITC. This amendment allowed registered taxpayers to claim ITC for supplies from financial years 2017-18, 2018-19, 2019-20, and 2020-21 in returns filed up until November 30, 2021. Get a Copy of Master GST – Expert-Led Courses for Ambitious Professionals, Click here The petitioner relied on this court’s judgment in the case of M/s. Sadhana Enviro Engineering Services v. Joint Commissioner of Central Tax, where the court allowed ITC claims based on the same amendment. Justice S.R. Krishna Kumar heard the case and acknowledged that the recent amendment under Section 16(5) of The Finance (No.2) Act, 2024 retroactively extended the deadline for claiming Input Tax Credit (ITC) for financial years 2017-18 to 2020-21. This amendment allows taxpayers to claim ITC for invoices from the specified periods in returns filed up until November 30, 2021, providing relief for those who missed initial deadlines.

The court further observed that the petitioner’s case fell within the category of the newly amended Section 16(5) of the CGST.  Citing the Sadhana Enviro Engineering Services v. Joint Commissioner of Central Tax, the court remanded the matter back to the tax authorities. Get a Copy of Master GST – Expert-Led Courses for Ambitious Professionals, Click here The court directed the tax authorities to reconsider the petitioner’s ITC claim in light of the Section 16(5) amendment and ensure a fair opportunity for the petitioner to present their case. The court also directed the authorities to unblock and release any credit balance in the petitioner’s ITC ledger if not already released.