Madras HC Allows GST ITC Claims for FY 2017-21 if GSTR-3B Filed by Nov 30, 2021

Registered taxpayers can claim Input Tax Credit (ITC) for the financial years 2017-18 to 2020-21, provided their GSTR-3B returns were filed on or before 30 November 2021, as cited by the Madras High Court.

The GST assessment order passed for FY 2018-19 has been quashed by Justice Krishnan Ramasamy, citing that the refusal of the ITC based on the limitation u/s 16(4) of the CGST Act was non-sustainable under subsequent legislative revisions.

Power Builders, the applicant, is a partnership firm that has contested an Order-in-Original on 10 April 2024 that reversed ITC and imposed tax, interest, and penalty based on the fact that the claim was time-barred u/s 16(4).

In the hearing, it said that the issue has been settled earlier in a batch of writ petitions decided dated 17 October 2024, wherein the earlier bench ruled that Section 16(5) of the CGST Act, inserted retrospectively w.e.f 1 July 2017 by the Finance Act (No.2) of 2024, permits ITC claims for FYs 2017-18 to 2020-21 if the pertinent GSTR-3B returns were filed up to 30 November 2021.

In the former ruling, it was marked that the revision was supported under the 53rd GST Council Meeting recommendation of 22 June 2024, Presidential assent on 16 August 2024, and subsequent CBIC GST Notification No.17/2024-Central Tax dated 27 September 2024, followed by Circular No.237/31/2024-GST.

Jointly, it cited that just for not fulfilling the earlier due date when the returns were submitted in the extended statutory window, the taxpayers could not refuse the Input Tax Credit (ITC).

Consequently, the High Court quashed the assessment order concerning the limitation issue, prohibited the Department from seeking recovery on that basis, and mandated prompt action to unfreeze the petitioner’s bank accounts if they were frozen.

Under the impugned order, any tax amounts collected need to be redundant or re-credited to the cash/credit ledger of the taxpayers for the adjustment against future liabilities.

Read Also: How to Maintain the Input Tax Credit Ledger with Gen GST Software?

As per the court, the same relief applies to the cases that engage the refusal of ITC on limitation grounds. Where the other problems like incorrect claim, discrepancies, or bogus ITC are engaged, to move as per the law, the department keeps the liberty.