Jharkhand High Court Quashes Order Denying Tax Credit For Late Returns In Light Of New GST Amendments

The Jharkhand High Court on 21 January, set aside an appellate order that denied Input Tax Credit (ITC) to a taxpayer, clarifying that credit cannot be denied solely for filing returns beyond the original deadline if subsequent statutory amendments expressly allow it.

In a case where the taxpayer claimed ITC for FY 2018-19, the Court noted that once Section 16(5) of the CGST Act, 2017 was inserted, registered persons became entitled to claim ITC for past financial years provided their returns were filed within the extended timeline of 30 November 2021. Appellate authorities must reconsider claims in light of this amendment and related CBIC clarifications.

The writ petition was filed by the taxpayer challenging the denial of ITC on the ground that the returns claiming such credit were filed beyond the time limit prescribed under Section 16(4). He had also questioned the constitutional validity of Section 16(4).

The Court quashed the order and remitted the matter for fresh consideration, noting that the subsequent Section 16(5) amendment made examination of the validity of Section 16(4) unnecessary at this stage.

The Court also took note of CBIC Circular No. 237/31/2024/GST, which clarified the implementation of sub-sections (5) and (6) of Section 16, observing that the clarification could have a bearing on the petitioner's case.

The Bench held:

“By adopting the reasoning in Vinod Udaipuri (supra) and further upon taking cognizance of insertion of Section 16(5) of the CGST Act, 2017 and CBIC Circular dated 15.10.2024, we quash and set aside the order in appeal dated 29.12.2023 and remit the matter to the appellate authority for deciding the revenue's appeal afresh and in accordance with law after considering the impact of insertion of Section 16(5) in the CGST Act, 2017 and CBIC Circular dated 15.10.2024.”

The High Court directed that the appellate authority must re-examine the matter after considering the Section 16(5) and Section 16(6) amendments and the CBIC circular. The parties have been directed to appear before the authority on 5 February 2026, with all contentions of both sides left open.