ITC Time Limit Relaxation Under Section 16(5): Analysis of Kameswari Agencies Vs Assistant Commissioner (AP High Court)

Background of the Dispute

The Andhra Pradesh High Court in Kameswari Agencies Vs Assistant Commissioner dealt with an important issue concerning the time limit for availing Input Tax Credit (ITC) under the GST regime, specifically the interplay between Section 16(4) and Section 16(5) of the GST Act.

The assessee, registered under the GST Act, had claimed ITC for supplies pertaining to the financial year 2019-20. The claims were made through returns filed for various tax periods from September 2019 to March 2020 on the following dates:

  • 9/2019 – filed on 26.10.2020
  • 10/2019 – filed on 26.10.2020
  • 11/2019 – filed on 26.10.2020
  • 12/2019 – filed on 26.10.2020
  • 1/2020 – filed on 26.10.2020
  • 2/2020 – filed on 26.10.2020
  • 3/2020 – filed on 27.10.2020

The first respondent passed orders dated 29.08.2024 and 30.08.2024 rejecting these ITC claims on the ground that they were filed beyond the limitation prescribed in Section 16(4) of the GST Act, which, according to the department, expired on 25.10.2020.

The assessee challenged these rejection orders by filing a writ petition before the Andhra Pradesh High Court.

Issue Before the Court

The central question before the Court was:

Whether the assessee’s ITC claims for the financial year 2019-20, filed in October 2020, were time-barred under Section 16(4) of the GST Act, or whether they were saved by the extended time limit provided under Section 16(5) of the GST Act.

In other words, the Court had to decide if the statutory extension granted by Section 16(5) would override the normal time restriction stipulated in Section 16(4) for the specific financial years mentioned therein.

Assessee’s Stand

The assessee’s counsel argued that:

  • Section 16(5) was introduced with effect from 01.07.2017.
  • This provision explicitly grants an extended window for availing ITC in respect of invoices or debit notes relating to Financial Years 2017-18, 2018-19, 2019-20 and 2020-21.
  • Under Section 16(5), ITC for those specified years can be claimed in any return filed under Section 39 up to 30.11.2021.
  • Since the ITC in dispute pertained to Financial Year 2019-20 and the returns were filed in the last week of October 2020, the claims were well within the extended deadline of 30.11.2021.
  • Therefore, the rejection based on Section 16(4) and the alleged expiry on 25.10.2020 was contrary to the statutory relaxation provided by Section 16(5).

On this basis, the assessee asserted that the impugned orders were unsustainable in law.

Department’s Position

The first respondent (department) took the stance that: