Newly notified Section 16(5) opens the door for revisiting denied ITC claims for specific periods – Kerala HC Ruling

 

Kerala High Court’s Significant Direction on Input Tax Credit (ITC) which can be considered as a landmark Ruling. The Kerala High Court has issued a noteworthy direction in a case involving the denial of Input Tax Credit (ITC) for the financial year 2018-19.

Let us have a Short Overview of the case:  

The assessee was denied ITC on the grounds of Section 16(4) of the CGST Act, 2017. However, the assessee argued that with the recent insertion of Section 16(5) (introduced through Section 118 of the Finance (No. 2) Act, 2024), they are now entitled to claim the ITC.

Court’s Decision:
The High Court directed the competent authority to revisit the case and pass fresh orders, taking into account the newly inserted Section 16(5) of the CGST Act.

This decision is a relief for taxpayers impacted by earlier restrictions on ITC claims and underscores the importance of the newly notified Section 16(5). It opens the door for revisiting denied ITC claims for specific periods, provided the conditions under Section 16(5) are satisfied.

This ruling demonstrates the evolving nature of GST law and highlights the judiciary’s proactive role in ensuring fair tax administration. Taxpayers should review their past ITC claims to identify opportunities in light of this development.

The copy of the order is as under:

1732453779523