ITC denial quashed as Madras High Court held retrospective extension of Section 16(4) deadline up to 30.11.2021 applies to FYs 2017–18 to 2020–21

Case Reference:
M/s. Aimz Spectrum Private Limited v. Assistant Commissioner of GST & Central Excise
High Court of Judicature at Madras
W.P. No. 6845 of 2024, decided on 14.02.2025
Category: Input Tax Credit (ITC) – Time limit under Section 16(4) of CGST Act
Relevant Provisions: Section 16(4), 16(5) & 16(6) of CGST Act, 2017; Notification No. 17/2024-Central Tax dated 27.09.2024; Circular No. 237/31/2024-GST

Facts (Para 1–3):

The petitioner, M/s Aimz Spectrum Private Limited, a registered dealer under the CGST Act, filed a writ petition challenging the Order-in-Original dated 13.12.2023 (DIN: 20231259TK000000DC9C) issued by the Assistant Commissioner of GST & Central Excise, Nungambakkam Division, Chennai. The order had reversed the petitioner’s claim of Input Tax Credit (ITC) on grounds of time-barred availment under Section 16(4) of the CGST Act, directing payment of tax, penalty, and interest.
The petitioner contended that the reversal ignored genuine hardships such as pandemic disruptions and that subsequent legal amendments rendered the denial unsustainable.

Questions for Determination (Para 2 & 10):

Whether the impugned order reversing ITC on grounds of limitation under Section 16(4) of the CGST Act remains valid in light of the retrospective amendment introduced through the Finance Act (No. 2) of 2024 and Circular No. 237/31/2024-GST clarifying that ITC for FYs 2017–18 to 2020–21 could be claimed till 30.11.2021.

Observations (Para 9–12 of W.P. No. 25081/2023 batch cited):

The Court noted that the 53rd GST Council Meeting (22.06.2024) recommended retrospective extension for availing ITC up to 30.11.2021 for financial years 2017–18 to 2020–21. This was subsequently legislated through insertion of Section 16(5) and 16(6) via the Finance Act (No.2) of 2024, which received Presidential assent on 16.08.2024.
Consequently, Notification No. 17/2024-Central Tax dated 27.09.2024 and Circular No. 237/31/2024-GST operationalized this amendment.
Thus, any ITC availed for these years in returns filed up to 30.11.2021 is deemed valid, notwithstanding the earlier limitation under Section 16(4).

The Court held that earlier assessment orders ignoring this amendment were no longer sustainable, and reversing ITC solely on limitation grounds would defeat the legislative intent of relief to taxpayers.

Judgment (Para 5–6):

The Madras High Court quashed the impugned order dated 13.12.2023 as the claim for ITC, though previously treated as time-barred under Section 16(4), was now valid under Section 16(5).
The Department was directed:

1. Not to initiate any fresh proceedings based on limitation.

2. To de-freeze the petitioner’s bank account immediately.

3. To refund or allow adjustment of any tax amounts already recovered from the petitioner’s cash/credit ledger.

4. Liberty was granted to proceed separately if there were issues of fake, excess, or wrong ITC unrelated to limitation.

Accordingly, the writ petition was allowed, and connected miscellaneous petitions were closed.

Table – Cases Referred

Between Fine Lines (Practical Takeaway):

This judgment reaffirms that the retrospective insertion of Section 16(5) allows taxpayers to claim ITC for FYs 2017–18 to 2020–21 through any GSTR-3B filed up to 30.11.2021. Any denial based solely on the earlier limitation under Section 16(4) is invalid. Businesses whose ITC claims were disallowed due to delayed filing during COVID-19 can now seek relief or refund, ensuring smoother reconciliation and compliance clarity.

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