Can Input Tax Credit Under GST Be Availed Beyond the Time Limit?

A. Overview of the Case:

Hon’ble Jharkhand High Court quashed an order disallowing Input Tax Credit (ITC) for FY 2018-19 and 2019-20 under Section 16(4) of the CGST Act, 2017. The court held that the matter must be reconsidered in light of the newly inserted Section 16 (5) of the CGST Act, which was made effective from 01.07.2017 and the same allows ITC claims for specified financial years up to 30.11.2021, notwithstanding the earlier time limit. (2024-VIL-966-JHR).

B. Details of the Case:

– Petitioner’s Argument: Singh Construction Company challenged the disallowance of ITC, arguing that the decision was made without considering the implications of sub-section (5) of Section 16, which was inserted into the CGST Act, 2017, by the Finance Act of 2024. This new provision allows registered persons to claim ITC for the financial years 2017-18 to 2020-21 up to 30.11.2021. The petitioner sought the quashing of the impugned order and a fresh decision in light of this updated legal framework.

– Respondent’s Argument: State counsel acknowledged the new insertion under Section 16(5) of the CGST Act and agreed that the case required fresh adjudication based on these new provisions. The State consented to the reconsideration of the matter, as the previous decision had been rendered without taking the updated law into account.

– Court’s Decision: The Jharkhand High Court quashed the impugned order, directing the authority to reconsider the matter afresh, factoring in the newly inserted sub-section (5) of Section 16. The court emphasized that the decision was made without prejudice to the merits of the case and mandated a fresh order to be passed within two months.