The Joint Commissioner (Appeals), being the First Appellate Authority of Goods and Services Tax (GST) matters recently affirmed that no refund of voluntarily paid tax or reversal of Input Tax Credit (ITC) already paid may be permissible on the basis of retrospective insertion of Section 16(5) to the Central Goods and Services Tax Act (CGST Act).

The decision was given by the Appellate Authority while disposing of multiple appeals pertaining to eligibility to avail Income Tax Credit (ITC) according to Section 16(4) of the Central Goods and Services Act, 2017 (CGST Act) and retrospective extension of deadline by means of the newly inserted Section 16(5) of the CGST Act. Transform GST Compliance with Expert Drafting Skills – Click here to Register 121 Kerala-based business entities filed appeals under Section 107(1) of the CGST Act impugning Orders-in-Original passed by adjudicatory authorities of the GST Department.

Majority of the Appellants were awarded opportunities of personal hearing under Section 107(8) of the CGST Act while some of them sought adjudication of their appeals without personal hearing. Among the numerous cases, the AAAR observed that some of the Appellants had voluntarily made tax payments via DRC-03 and the same had been duly appropriated towards the demands raised against the Appellants at the time.

Transform GST Compliance with Expert Drafting Skills – Click here to Register Reference was made to Notification No. 22/2024–Central Tax dated 8.10.2024, wherein a special procedure for the rectification of orders to be followed by a class of registered persons against whom any order under Section 73, Section 74, Section 107 or Section 108, CGST Act had been raised confirming demand citing wrong availment of ITC in contravention of Section 16(4) of the Act was laid down. The introduction of Section 16(5) through the Finance (No. 2) Act, 2024 reversed the effects of Section 16(4) for registered persons to avail ITC under Section 30 until the 30th day of November, 2021 for the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21. Transform GST Compliance with Expert Drafting Skills – Click here to Register

However, Corrigendum to Circular No. 237/31/2024-GST dated 15th October 2024 clarified that “restriction on refund under section 150 of the Finance (No. 2) Act, 2024 will not apply to the refund of an amount paid as pre-deposit by the taxpayer as per sub-section (6) of section 107 or sub-section (8) of section 112 of the CGST Act, at the time of filing of an appeal, where such appeals are decided in favor of the said taxpayer.” Referring to Section 150 of the Finance (No.2) Act, 2024, Joint Commissioner (Appeals), Ajitesh Radhakrishnan pronounced that no refund of any tax paid or input tax credit reversed shall be granted on account of the retrospective insertion of Sub-Section (5) and Sub-Section (6) to Section 16 of the CGST Act.