Vinayaga Trading Enterprises Vs Deputy State Tax Officer
Date: October 2, 2024
Court: High Court
Bench: Madras
Type: Writ Petition
Subject Matter
ITC beyond period prescribed u/s. 16(4) to be re-visited post Finance Act, 2024 amendment
Summary
In this case, the Madras High Court addressed a writ petition challenging an assessment order dated January 31, 2024, which disallowed input tax credit (ITC) for the financial year 2017-2018 on the grounds that the claim was filed beyond the time limit stated in Section 16(4) of the GST Act. However, a new amendment (Section 16(5)) was introduced through the Finance (No. 2) Act, 2024, allowing the registered persons to claim ITC for invoices or debit notes pertaining to the financial years 2017-18 through 2020-21 if the returns were filed up until November 30, 2021. The court concluded that the reasons cited by the adjudicating authority for the assessment order might no longer hold due to this amendment, thereby necessitating a re-evaluation of the assessment in light of the new provisions. Additionally, the court ordered the withdrawal of any garnishee proceedings related to this matter. The respondent was directed to reconsider the assessment after providing the petitioner an opportunity to submit objections or responses, thus setting aside the original assessment order but leaving other aspects of the order intact. The court granted the respondent the liberty to continue garnishee proceedings for any unrelated demand.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The present Writ Petition is filed challenging the assessment order dated 31.01.2024 for the period 2017-2018, on the premise that the Input Tax Credit has been disallowed only on the ground that the claims have been lodged beyond the period prescribed under Section 16(4) of the GST Acts.
2. It is submitted that an amendment has been brought into the GST Acts and that Section 16(5) has now been inserted vide Section 118 of the The Finance (No. 2) ACT, 2024 and the relevant provisions reads as under:
“118. In section 16 of the Central Goods and Services Tax Act, with effect from the 1st day of July, 2017, after sub-section (4), the following sub-sections shall be inserted, namely:––
“(5) Notwithstanding anything contained in subsection (4), in respect of an invoice or debit note for supply of goods or services or both pertaining to the Financial Years 2017-18, 2018-19, 2019-20 and 2020-21, the registered person shall be entitled to take input tax credit in any return under section 39 which is filed up to the thirtieth day of November, 2021.”
(6) Where registration of a registered person is cancelled under section 29 and subsequently the cancellation of registration is revoked by any order, either under section 30 or pursuant to any order made by the Appellate Authority or the Appellate Tribunal or court and where availment of input tax credit in respect of an invoice or debit note was not restricted under subsection (4) on the date of order of cancellation of registration, the said person shall be entitled to take the input tax credit in respect of such invoice or debit note for supply of goods or services or both, in a return under section 39,––
(i) filed up to thirtieth day of November following the financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier; or
(ii) for the period from the date of cancellation of registration or the effective date of cancellation of registration, as the case may be, till the date of order of revocation of cancellation of registration, where such return is filed within thirty days from the date of order of revocation of cancellation of registration, whichever is later.”
3. It is submitted by the learned counsel for the petitioner that in view of the above amendment, the reasons cited by the adjudicating authority while passing the impugned order of assessment may no longer survive and the respondent would have to re-do the assessment in accordance with the above amendment. It is further submitted that subsequent to the passing of the impugned order, garnishee proceedings have also been initiated and the same may be withdrawn.
4. The learned counsel for the petitioner would submit that earlier this Court has on numerous occasions, remanded on the basis of the Bill proposing the present amendment. The learned counsel for the respondent would submit that they would re-do the assessment taking into account the Finance (No. 2) Act, 2024 and the garnishee proceedings would be withdrawn.
5. In view thereof, the impugned order passed by the respondent dated 31.01.2024 is set aside. The learned assessing/adjudicating authority/respondent would re-do the assessment by taking into account the amendment referred supra. The petitioner may submit their objection by way of reply, within a period of three (3) weeks from the date of receipt of a copy of this order along with the amendment and other details. If any such reply is filed, the same shall be considered and orders shall be passed, after affording reasonable opportunity of personal hearing to the petitioner. In respect of other issues, the impugned order shall remain undisturbed. The respondent shall withdraw the garnishee proceedings, insofar as it relates to the demand in view of denial of ITC in terms of Section 16(4) of the Act for the period 2017-2018 covered vide order, dated 31.01.2024. Liberty is granted to the respondent to continue with the garnishee proceedings in respect of any other demand covered by the said garnishee proceedings.
6. With the above direction, this Writ Petition is disposed of. No costs. Consequently, connected miscellaneous petitions are closed.