Calcutta High Court Grants Relief on ITC Denial: Rectification Allowed Under Newly Inserted Section 16(5) of GST Act
The intersection of statutory deadlines and the right to claim Input Tax Credit (ITC) has been a highly litigated arena under the Goods and Services Tax (GST) regime. In a highly significant judicial development, the Calcutta High Court, in the matter of Hiranmoy Dutta Vs State of West Bengal & Ors., has provided a definitive pathway for an assessee to seek rectification against an adverse tax demand. The dispute primarily revolved around the denial of ITC due to the delayed filing of Form GSTR-3B returns.
By leveraging the newly introduced Section 16(5) of the West Bengal/Central Goods and Services Tax Act, 2017, the High Court established that legislative amendments designed to cure historical anomalies must be given full effect, thereby allowing the assessee to regularize their previously denied ITC claims.
Background of the Dispute: The Section 16(4) Conundrum
The genesis of the litigation in Hiranmoy Dutta Vs State of West Bengal & Ors. traces back to an adjudication order passed by the revenue authorities. The assessee was subjected to proceedings under Section 73 of the West Bengal/Central Goods and Services Tax Act, 2017.
On 6th February 2024, the adjudicating authority issued an order denying the ITC claimed by the assessee for the tax period spanning from July 2018 to March 2020. The sole ground for this disallowance was the invocation of Section 16(4) of the West Bengal/Central Goods and Services Tax Act, 2017. This statutory provision restricts an assessee from availing ITC in respect of any invoice or debit note after the statutory due date for furnishing the return under Section 39 for the month of September following the end of the financial year, or furnishing of the relevant annual return, whichever is earlier.
Because the assessee had filed the Form GSTR-3B returns for the contested period beyond the prescribed statutory due date, the revenue department systematically reversed the credit and raised a corresponding demand. Aggrieved by this stringent application of the law, the assessee approached the Calcutta High Court by filing a writ petition, registered as WPA 13453 of 2024.