Top Stories GST ITC Rejected due to Claims filed beyond Period Specified u/s 16(4): Madras HC Directs to Re-do Assessment in Light of Finance Act, 2024 [Read Order] In its ruling, the bench set aside the assessment order dated January 31, 2024, and directed the assessing officer to re-evaluate the case, taking into account the amendments introduced by the Finance (No. 2) Act, 2024 By Navasree A.M – On October 9, 2024 10:23 pm – 2 mins read The Madras High Court has directed the Goods and Services Tax ( GST ) department to re-do the assessment considering the amendments in Finance Act ( No. 2 ), 2024 in a matter of rejection of Input Tax Credit ( ITC ) claim filed beyond the statutory period mentioned under Section 16(4) of the GST Act. The assessee, Sri Vinayaga Trading Enterprises, filed a writ petition. The dispute revolved around the denial of ITC claims on the grounds that they were lodged beyond the time limit prescribed under Section 16(4) of the Central Goods and Services Tax ( CGST ) Act. Complete Draft Replies of GST ITC Related Notices, Click Here The petitioner argued that recent amendments introduced in the Finance ( No. 2 ) Act, 2024, specifically Section 16(5), should be considered.

The petitioner contended that the reasons for disallowing the ITC claims, based solely on Section 16(4), were no longer valid due to the legislative changes. The Finance ( No. 2 ) Act, 2024, inserted new provisions into Section 16 of the GST Act through Section 118. According to the amendment, Section 16(5) provides that, notwithstanding the restrictions imposed under Section 16(4), ITC can be claimed for invoices or debit notes pertaining to the financial years 2017-18, 2018-19, 2019-20, and 2020-21. Importantly, ITC claims can be filed in any return submitted under Section 39 until November 30, 2021. This change has implications, as it extends the period for claiming ITC beyond the original timeframe stipulated in Section 16(4). Complete Draft Replies of GST ITC Related Notices, Click Here Additionally, Section 16(6) addresses cases where a registered person’s GST registration was cancelled but later restored. In such cases, ITC claims can be filed within specified timelines, either until November 30 following the financial year in question or within 30 days of the revocation of registration cancellation. The petitioner’s counsel submitted that, considering the amendments, the reasons provided by the assessing officer for rejecting the ITC claims under the previous framework no longer held up.

The counsel also pointed out that subsequent to the original assessment order, garnishee proceedings were initiated to recover dues, which should now be withdrawn. Citing previous instances where courts had remanded cases based on pending legislative amendments, the petitioner requested the reassessment of the case under the updated legal provisions. Complete Draft Replies of GST ITC Related Notices, Click Here The respondent, representing the department, agreed to re-do the assessment in accordance with the Finance ( No. 2) Act, 2024, and confirmed that the garnishee proceedings related to the ITC denial would be withdrawn. However, the respondent reserved the right to continue garnishee proceedings concerning any other pending demands. In its ruling, Justice Mohammed Shaffiq set aside the assessment order dated January 31, 2024, and directed the assessing officer to re-evaluate the case, taking into account the amendments introduced by the Finance ( No. 2 ) Act, 2024.

The Court provided the petitioner with a three-week window to submit their objections, which should include relevant details and references to the amended law. The assessing authority was instructed to consider the objections and ensure that the petitioner was granted a fair hearing before passing a new assessment order. Complete Draft Replies of GST ITC Related Notices, Click Here While the other issues in the original order remained undisturbed, the Court ordered the withdrawal of the garnishee proceedings related to the ITC denial for the financial year 2017-18.