Writ petition disposed allowing rectification of past ITC denials in view of retrospective extension under Section 16(4) CGST Act

Case Title: M/s North Agro Industries Pvt. Ltd. v. Union of India & Others
Court: High Court of Punjab and Haryana, Chandigarh
Petition No.: CWP-15400-2024 (O&M)
Date of Judgment: 10.12.2024
Category: Input Tax Credit – Retrospective Amendment and Rectification under Section 148
Relevant Sections: Sections 16(4), 16(5), 16(6), 73, 74, 107, 108 and 148 of the CGST Act, 2017; Notification No. 22/2024–Central Tax dated 08.10.2024

Facts (Paras 1–2)

The petitioner, M/s North Agro Industries Pvt. Ltd., challenged denial of Input Tax Credit (ITC) based on expiry of the time limit under Section 16(4) of the CGST Act. The Ministry of Finance issued a circular dated 15.10.2024, clarifying the retrospective effect of newly inserted sub-sections (5) and (6) of Section 16 (via Finance Act, 2024 effective from 01.07.2017). This amendment retrospectively extended the period for availing ITC. The circular further stated that taxpayers against whom action had been taken under Sections 73 or 74 or whose appeals had been decided under Sections 107 or 108 for alleged wrongful ITC availment, could seek rectification of such orders.

Questions of Law

Whether the petitioner is entitled to seek rectification of earlier ITC denial orders under Section 148 of the CGST Act, 2017, in light of the retrospective amendment to Section 16(4) and the Ministry’s circular dated 15.10.2024.

Observations (Para 2–3)

The Court took note of the special procedure notified under Section 148 through Notification No. 22/2024 – Central Tax dated 08.10.2024, which allows taxpayers to apply for rectification within six months from 15.10.2024, i.e., up to 15.04.2025. The Court quoted para 3.5 of the circular, which explicitly permits rectification of orders confirming demand for wrong availment of ITC under Sections 73, 74, 107, or 108, provided the credit is now allowable as per Sections 16(5) or 16(6).

The Court observed that the petitioner falls within the ambit of the above relief and should, therefore, be given the opportunity to apply for rectification in line with the retrospective clarification issued by the Government.

Judgment (Para 3–4)

The High Court disposed of the writ petition, allowing the petitioner to file an application for rectification as per the special procedure notified under Section 148. It directed that if such an application is made, it shall be decided in accordance with Sections 16(5) and 16(6) of the CGST Act, 2017. All pending miscellaneous applications were also disposed of.

Summary of Cases/References

Between Fine Lines

The ruling reinforces that taxpayers who were earlier denied ITC due to time-bar under Section 16(4) can now seek rectification following the retrospective legislative amendment. This effectively reopens a window for relief from past ITC disputes, provided applications are filed within the notified six-month period.

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