Writ petition disposed of allowing taxpayer to seek rectification where ITC was earlier denied due to time-bar, in view of retrospective relaxation under Finance Act, 2024 and MoF Circular dated 15.10.2024

Case Title: M/s Doublelife Rubber Industries v. Union of India & Others
Court: High Court of Punjab and Haryana, Chandigarh
Petition No.: CWP No. 14569 of 2024 (O&M)
Date of Judgement: 10.12.2024
Category of Dispute: Input Tax Credit – Rectification of Orders under Section 16(4), read with Sections 73, 74, 107, 108 and 148 of the CGST Act, 2017

Facts (Para 1–2)

The petitioner, M/s Doublelife Rubber Industries, approached the High Court challenging denial of input tax credit (ITC) for alleged violation of the time-limit under Section 16(4) of the CGST Act, 2017. During pendency of the petition, the Ministry of Finance issued a Circular dated 15.10.2024, clarifying that the newly inserted sub-sections (5) and (6) of Section 16, brought in by the Finance Act, 2024, extended the time-limit for availing ITC retrospectively from 01.07.2017.

The circular also addressed the manner of rectifying past orders issued under Sections 73, 74, 107, or 108 of the Act where ITC was earlier disallowed due to delay. Further, Notification No. 22/2024–Central Tax dated 08.10.2024 invoked Section 148 to provide a special procedure permitting taxpayers to apply for rectification within six months from 15.10.2024, i.e., up to 15.04.2025.

Questions before the Court (Para 2–3)

1. Whether the petitioner, whose ITC was denied earlier on the ground of limitation under Section 16(4), could now seek rectification of such order in light of retrospective amendment introduced by Finance Act, 2024?

2. Whether the writ petition could be disposed of by allowing the petitioner to follow the procedure prescribed under Notification No. 22/2024 issued under Section 148?

Observations (Para 2–3)

The Court noted that the Ministry of Finance’s Circular and the Finance Act, 2024 have expressly extended the time-limit retrospectively, thereby legitimizing ITC claims that were earlier rejected as time-barred. The Court further referred to para 3.5 of the Circular dated 15.10.2024, which explicitly allows taxpayers to move for rectification of orders under Sections 73, 74, 107, or 108 if the ITC now becomes admissible by virtue of the retrospective amendment.

It was observed that the special procedure under Section 148 provides a six-month window for taxpayers to submit rectification applications, and that the adjudicating authority must consider such applications in accordance with the newly inserted sub-sections (5) and (6) of Section 16.

Judgement (Para 3–4)

The Division Bench disposed of the writ petition, permitting the petitioner to file a rectification application before the proper authority by following the special procedure under Section 148 as notified by Notification No. 22/2024–Central Tax dated 08.10.2024.
The Court directed that if such an application is filed within the prescribed period, the same shall be decided keeping in view the retrospective provisions of Section 16(5) and (6) of the CGST Act. All pending miscellaneous applications were disposed of accordingly.

Summary of Cases Referred

Between Fine Lines

This decision provides major relief to taxpayers who lost ITC merely due to procedural delay. By recognizing the retrospective relaxation of time-limit under Section 16(5) & (6), the Court opened a window for rectification of past adverse orders under Sections 73 or 74. Businesses should promptly review all ITC denial cases on time-bar grounds and move rectification applications by 15 April 2025, leveraging Section 148’s special procedure.

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.”