ITC denial quashed as retrospective insertion of Section 16(5) validated delayed claim beyond October 2019

Case Title: M/s Padmavathi Enterprises v. Superintendent of Central Tax & Others
Court: High Court of Andhra Pradesh, Amaravati
Petition No.: W.P. No. 2555 of 2023
Judgment Date: 19 March 2025
Category: Input Tax Credit (ITC) – Time Limitation under Section 16(4) and retrospective benefit under Section 16(5)
Relevant Sections: Section 16(4) and 16(5) of the CGST Act, 2017; Section 39 of CGST Act

Facts (Paras 1–3)

M/s Padmavathi Enterprises was assessed under CGST, APGST, and IGST Acts by order dated 05.08.2021. During assessment, the petitioner attempted to claim Input Tax Credit (ITC) through the electronic credit ledger on 31.10.2019. The Superintendent of Central Tax rejected this claim stating that, as per Section 16(4) of the CGST Act, ITC for FY 2018–19 could be availed only up to 20.10.2019. The appeal filed before the Appellate Authority (Appeal No. 48 of 2021(T)GST) was dismissed on 13.10.2022 on the same ground of limitation.

Questions before the Court

Whether the petitioner’s ITC claim made on 31.10.2019 for FY 2018–19—though beyond the date prescribed under Section 16(4)—stood validated by the subsequent insertion of Section 16(5) of the CGST Act through Finance Act 2024, effective 27.09.2024, granting extended time till 30.11.2021 for ITC availment of earlier years.

Observations (Paras 4–5)

The Court noted that Section 16(5), inserted by the Finance Act 2024 with a non-obstante clause, provided that ITC relating to FYs 2017-18, 2018-19, 2019-20, and 2020-21 could be availed “in any return under Section 39 filed up to 30 November 2021.”
The Court observed that since this amendment explicitly overrides Section 16(4) and was introduced to regularize delayed ITC availment for those financial years, it retroactively validated claims like that of the petitioner. Therefore, the rejection of ITC on grounds of limitation under Section 16(4) no longer held legal force.

Judgment (Para 6)

The High Court set aside both:

• the appellate order dated 13.10.2022, and

• the assessment order dated 05.08.2021.

The matter was remanded to the assessing authority to issue a fresh order considering the retrospective application of Section 16(5) of the CGST Act.
No order as to costs; pending miscellaneous petitions were closed.

Summary of Referred Provisions / Precedents

Between Fine Lines (Practical Takeaway)

This ruling confirms that the retrospective insertion of Section 16(5) legitimizes ITC claims earlier denied for being “time-barred.” Businesses that missed the October 2019 deadline for ITC pertaining to FY 2017-18 to 2020-21 can now seek reassessment or refund relief, as the extended timeline till 30 November 2021 protects such claims. Authorities must reassess such cases in light of the legislative intent to regularize genuine ITC availment.

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