GST demand directed for reconsideration as retrospective amendment under Section 16(5) entitles taxpayer to ITC filed up to November 2021

Case Summary: Heramba Narayan Panda v. Commissioner, CGST & CX, Cuttack, WP(C) No. 20229 of 2025, Orissa High Court — Order dated 29 July 2025
Category: Input Tax Credit (ITC) – Rectification under amended Section 16(5) CGST Act

Facts (Paras 2–4.2):

The petitioner, Heramba Narayan Panda, challenged an order dated 23 April 2024 under Section 73 of the CGST/OGST Acts for FY 2018–19, whereby the Superintendent, CGST & CX, Jajpur Range-III, disallowed ITC of ₹ 6.58 lakh claimed after the due date for filing GSTR-3B. The petitioner argued that although returns were delayed, tax liability was fully discharged using legitimate credits reflected in GSTR-2B.

Relying on the Finance (No. 2) Act, 2024, which inserted Section 16(5) with retrospective effect from 01 July 2017, the petitioner claimed entitlement to take ITC on invoices for FY 2017-18 to 2020-21 in any return filed up to 30 November 2021. Notification No. CBIC-20006/20/2023-GST dated 15 October 2024 and Circular No. CBIC-20001/6/2024-GST of the same date prescribed a special procedure for rectifying orders passed under Sections 73, 74, 107, or 108 where ITC was disallowed under the erstwhile Section 16(4).

The petitioner filed an application for rectification on 14 February 2025, which the Department acknowledged but failed to decide. Counsel produced screenshots evidencing technical glitches while uploading the application and cited rulings in Shiv Construction Company v. Addl. Commissioner (Guj.), Adhiraj Distributors Ltd. (Cal.), and Med Biogenex Pvt. Ltd. (Cal.), which had recognized similar retrospective relief.

Questions before the Court (Paras 2, 5):

Whether the petitioner’s application for rectification of the order-in-original (disallowing ITC due to late return filing) must be considered under the retrospectively amended Section 16(5) and corresponding CBIC notification/circular.

Court’s Observations (Paras 6–8):

The Court observed that the petitioner’s rectification application concerning the order dated 23 April 2024 remained pending before the Superintendent, despite the amendment and procedural notifications. Since the underlying demand stemmed solely from ITC disallowance, the authority was required to reassess the issue by taking cognizance of the Finance (No. 2) Act 2024 and CBIC guidelines. The Court held that reconsideration was necessary, subject to compliance with all procedural conditions laid down in the notification and circular.

Judgement (Paras 7–9):

Without entering the merits of the ITC claim, the Court directed the Superintendent, CGST & CX, Jajpur Range-III to dispose of the rectification application within three weeks from submission of this order, in accordance with law and by considering the petitioner’s cited precedents. The authority was further directed to grant a personal hearing before taking a decision.

Summary of Cases Referred

Between Fine Lines — Trade Takeaway:

This ruling reinforces that taxpayers who missed GSTR-3B filing deadlines for FY 2017-18 to 2020-21 can seek rectification of earlier adverse orders if ITC was disallowed solely due to timing. The Orissa High Court’s direction ensures administrative consistency with the Finance (No. 2) Act 2024 and CBIC Circular dated 15 October 2024. Practically, taxpayers must promptly file rectification applications within the notified six-month window and maintain proof of attempted portal submission to safeguard their ITC entitlements.

Disclaimer – “The above summary is for academic purpose only; not formal legal opinion. Seek professional opinion before application. Author or publisher or website shall not be responsible for any usage in any form.”