Input Tax Credit Restored Due to Retrospective Extension of Time Limit

Case Name: Mellow Foundation Builders and Developers Pvt. Ltd. v. Superintendent, Central Tax and Central Excise, Kozhikode Range-1
Court: Kerala High Court
Petition No.: WP(C) No. 23524 of 2024
Date of Judgement: 23 January 2025
Category: Input Tax Credit
Relevant Section(s): Section 16(4) and 16(5) of the CGST Act
Rule(s): Rule 61 of CGST Rules, 2017

Facts of the Case

[Para 2–3]
The petitioner, Mellow Foundation Builders and Developers Pvt. Ltd., filed this writ challenging the adjudication order dated 18.04.2024 passed under Section 73(9) of the CGST Act for FY 2018–19. The order denied ITC due to the petitioner’s delay in filing GSTR-3B returns beyond the time limit prescribed under Section 16(4).

The returns from November 2018 to March 2019 were filed on 26.11.2019, which was later than the original deadline of 20.10.2019. However, the petitioner contended that due to the retrospective extension of the time limit via Section 16(5), the returns must be considered as filed within time.

Question(s) in Consideration

[Para 5]
Whether the denial of input tax credit (ITC) on the basis of delay in filing GSTR-3B was legally sustainable in view of the retrospective extension of the time limit under Section 16(5) of the CGST Act?

Observation of Court

[Para 5]
The Court acknowledged that the original time limit for filing returns for availing ITC under Section 16(4) expired on 20.10.2019. Since the petitioner filed GSTR-3B on 26.11.2019, ITC was disallowed.

However, the Court noted the legal effect of the newly introduced Section 16(5), which extended the time limit for availing ITC up to 30.11.2021. Therefore, the return filed by the petitioner would now be considered timely under the extended provision.

Judgement of the Court

[Para 5]
The Court quashed the impugned adjudication order dated 18.04.2024. It directed the Respondent Officer to pass a fresh order after considering the extended time period under Section 16(5) and granting the petitioner an opportunity of hearing. The new order is to be issued within three months from receipt of the certified copy of the judgment.

Between Fine Lines

• Denial of ITC solely for delay in GSTR-3B filing was invalid post introduction of Section 16(5).

• Time limit for availing ITC now extended retrospectively up to 30.11.2021.

• Petitioner’s return dated 26.11.2019 deemed within time under new provision.

• The impugned order was set aside for re-evaluation under amended law.

• Courts upheld procedural fairness and application of retrospective beneficial provisions.

Summary of Referred Cases

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.”