The Kerala High Court has directed the State Tax Officer to reconsider the input tax credit claimed by Zach Rubber Private Limited for March 2020 in light of Section 16(5) of the Central Goods and Services Tax Act, 2017. The Court found that the relevant GST return had been filed within the extended statutory cut-off date prescribed under the provision.
The judgment was delivered by Justice Ziyad Rahman A.A. on 14 July 2026 in Zach Rubber Private Ltd. v. State Tax Officer & Ors., W.P.(C) No. 20131 of 2026. The petitioner challenged an adjudication order passed under Section 73 of the CGST/SGST Act which, among other things, denied input tax credit for March 2020 on the ground that the return had not been furnished within the time prescribed under Section 16(4).
Background of the dispute
The adjudicating authority had identified two discrepancies. The first related to the delayed filing of the return for March 2020 and the consequent denial of input tax credit under Section 16(4). The second related to alleged excess input tax credit noticed on verification of the entries appearing in GSTR-2A.
The petitioner informed the Court that the amount relating to the GSTR-2A discrepancy had already been paid. The dispute before the High Court was therefore confined to the denial of input tax credit for March 2020 on the basis of Section 16(4).
The petitioner relied upon Section 16(5) of the CGST Act. The provision permits input tax credit in respect of specified earlier financial years where the return under Section 39 was furnished on or before 30 November 2021.
Return filed within the Section 16(5) cut-off date
The High Court examined the return produced by the petitioner and noted that the return for March 2020 had been filed on 17 November 2020. Since the return was furnished before the cut-off date of 30 November 2021 contemplated under Section 16(5), the Court held that the petitioner was entitled to have its claim considered under the beneficial provision.
The Court consequently quashed the adjudication order to the limited extent that it denied input tax credit for March 2020 on the ground of violation of Section 16(4).
Direction issued by the High Court
The State Tax Officer was directed to reconsider the matter and extend the benefit of input tax credit for March 2020 in accordance with Section 16(5), provided the petitioner was otherwise eligible for the credit.
The authority must pass the necessary order within three months from the date of receipt of a copy of the judgment. The petitioner must also be afforded an opportunity of hearing before the fresh decision is taken.
Key legal principle
The judgment confirms that an input tax credit claim cannot be rejected solely by applying the limitation contained in Section 16(4) where the taxpayer satisfies the conditions of the subsequently introduced Section 16(5). Where the relevant return was furnished on or before 30 November 2021, the adjudicating authority must examine the claim in light of Section 16(5), subject to the taxpayer satisfying all other eligibility requirements.
The ruling is relevant for taxpayers whose input tax credit for the specified earlier periods was denied because of delayed return filing, despite the return having been furnished within the extended statutory timeline recognised under Section 16(5).
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