Kerala High Court Allows Reconsideration of ITC Denial under Sections 16(2)(c) & 16(4)

Case Details

• Case Name: Champadan Kandiyil Vijeesh v. State Tax Officer & Ors.

• Court: High Court of Kerala, Ernakulam

• Petition No.: WP(C) No. 44849 of 2024

• Date of Judgment: 17 December 2024

• Category of Dispute: Input Tax Credit (ITC) – Denial under Section 16(2)(c) & Section 16(4)

• Relevant Sections: Section 16(2)(c), Section 16(4) of CGST/SGST Acts; Circulars referred in M. Trade Links v. Union of India (2024 KLT Online 1624)

Facts of the Case (Para 1–3)

• The petitioner, proprietor of M/s. Cherry Creations, challenged denial of Input Tax Credit (ITC) under Section 16(2)(c) and Section 16(4) of the CGST/SGST Acts.

• He relied on the Kerala High Court judgment in M. Trade Links v. Union of India (2024 KLT Online 1624) to claim that ITC denied under Section 16(4) should be reconsidered.

• Regarding Section 16(2)(c), the petitioner stated that he was unable to trace the suppliers but sought relief based on departmental circulars mentioned in M. Trade Links (para 101).

Question(s) in Consideration (Para 2–3)

1. Whether the petitioner is entitled to ITC benefit under Section 16(4) based on parity with M. Trade Links.

2. Whether ITC denied under Section 16(2)(c) can be reconsidered if the petitioner produces documents in line with CBIC circulars.

Observations of the Court (Para 5–6)

• The Court observed that the directions in M. Trade Links are applicable to similarly situated taxpayers.

• ITC claims denied under Section 16(4) should be reconsidered if factual conditions are similar.

• For Section 16(2)(c), the authority must examine petitioner’s documents as per the CBIC circulars (para 101 of M. Trade Links).

Judgment of the Court (Para 6–7)

• Assessment order (Ext.P4) was set aside to the extent of ITC denial under Sections 16(2)(c) and 16(4).

• First Respondent (STO) directed to pass a fresh order within 2 months after considering M. Trade Links judgment and relevant circulars.

• Petitioner must produce supporting documents within 1 month, failing which he will lose entitlement to relief under Section 16(2)(c).

Between Fine Lines (Simplified Summary)

1. Kerala High Court allowed reconsideration of ITC denial under Sections 16(2)(c) & 16(4).

2. Relief under Section 16(4) follows earlier M. Trade Links ruling.

3. Relief under Section 16(2)(c) depends on producing supplier-related documents.

4. Old assessment order partly quashed; fresh decision mandated within 2 months.

5. If documents are not furnished in time, ITC claim under Section 16(2)(c) lapses.

Summary of Referred Cases

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