Kerala High Court Grants Wild Planet ITC Benefit, Says Delay Cannot Defeat Statutory Right

The Kerala High Court on 28 July held that a taxpayer cannot be denied the statutory benefit of input tax credit (ITC) under Section 16(5) of the Central Goods and Services Tax (CGST) Act merely because it failed to file a rectification application within the deadline prescribed by the Central Board of Indirect Taxes and Customs (CBIC).

Justice Ziyad Rahman A.A. allowed the petition filed by Wild Planet Pvt. Ltd. and set aside the order denying the company ITC, holding that Section 16(5) confers a statutory entitlement retrospectively and that a delay in filing a rectification application cannot take away that benefit when the taxpayer otherwise satisfies the statutory conditions. He held:

“I am of the view that, merely because of the reason that the petitioner did not submit a rectification application within the time specified above, his claim need not be rejected. This is particularly because, as far as the right to claim the Input Tax Credit under Section 16(5) of the Act is concerned, it is a statutory entitlement, and it is a provision introduced retrospectively. Therefore, merely because, there occurred some delay on the part of the petitioner, that statutory benefit, which the petitioner is otherwise entitled, need not be declined…”

The case arose from an order passed under Section 73 of the CGST Act, which empowers the department to determine tax not paid or short paid for reasons other than fraud or wilful misstatement, denying Wild Planet's ITC on the ground that it had not filed its returns within the time prescribed under Section 16(4).

Wild Planet relied on Section 16(5), which retrospectively provides relief to taxpayers who filed their returns within the specified cut-off date. The department, however, contended that the company could not claim the benefit because the deadline of 30 June 2025 for filing a rectification application under the relevant CBIC circular had expired.

The Court rejected the objection, holding that the expiry of the time prescribed for filing a rectification application could not extinguish the statutory right to claim ITC under Section 16(5).

The Bench also noted that the show cause notice itself recorded that Wild Planet had filed the relevant returns on 25 December 2020 and 29 December 2020, which fell within the period prescribed under Section 16(5).

Accordingly, the High Court quashed the department's order and directed the Assessing Authority to reconsider the matter and grant the ITC benefit under Section 16(5), subject to Wild Planet satisfying the other applicable conditions.

For Petitioner (s): P. Raghunathan, M. Shylaja and Rishal K, Advocates 

For Respondent (s): J. Vishnu, Additional Standing Counsel, Central Board of Indirect Taxes and Customs