• Dated 02^nd February, 2026

Subsequent Insertion of Section 16(5) Requires Re-examination of ITC Denial under Section 16(4): Jharkhand High Court

Brief Facts Involved

The petitioner availed Input Tax Credit (ITC) pertaining to the period October 2018 to March 2019 in October 2019. The department disputed the availment on the ground that the ITC was claimed beyond the time limit prescribed under Section 16(4) of the CGST Act, 2017.

The adjudicating authority had earlier allowed the ITC, but the Order-in-Appeal dated 29.12.2023 reversed the decision, holding that the amendment to Section 16(4) introduced by the Finance Act, 2022 was not applicable retrospectively. Aggrieved, the petitioner approached the Jharkhand High Court

Assessee 's Contentions:

The petitioner challenged the constitutional validity of Section 16(4), arguing that once conditions under Section 16(2) are fulfilled, denial of ITC on the ground of time limitation is arbitrary and violative of Articles 14, 19(1)(g) and 300-A of the Constitution.

It was contended that there is no mandate to avail ITC only through GSTR-3B within the time limit under Section 16(4) and that delay in filing returns can at best attract late fees under Section 47. The petitioner further argued that subsequent amendment inserting Section 16(5) and CBIC clarification should protect the ITC already availed.

Department's Contentions:

The department relied upon Section 16(4) to argue that ITC availed beyond the prescribed time limit is not permissible under law. It supported the appellate authority's view that amendments introduced later cannot automatically validate past ITC, unless expressly provided.

The department justified the reversal of the original adjudication order and sought strict interpretation of statutory timelines.

Court's Decision:

The Hon'ble High Court observed that after passing of the impugned appellate order, a significant statutory change occurred by insertion of Section 16(5) of the CGST Act, granting relief for ITC pertaining to FYs 2017-18 to 2020-21. The Court also took note of CBIC Circular No. 237/31/2024/GST dated 15.10.2024, clarifying implementation of Sections 16(5) and 16(6).

Hence, relying on its earlier co-ordinate Bench decision, the Court quashed the impugned Order-in-Appeal and remanded the matter to the appellate authority for fresh adjudication, after considering the impact of Section 16(5).

BTA's Comment:

This judgment is procedural but highly important for ITC litigation. The Court deliberately avoided ruling on the constitutionality of Section 16(4) and instead emphasized that subsequent beneficial amendments and clarificatory circulars cannot be ignored while deciding pending disputes.

The judgement reinforces the principle that ITC is a substantive benefit, and authorities must re-examine past disputes in light of Section 16(5) rather than mechanically rejecting claims based on pre-amendment law. This case offers strong support for remand-based relief in time-bar related ITC disputes.

Case Ref: Manoj Kumar Singh vs. Principal Commissioner of Central Goods and Service Tax & Central Excise, Ranchi, W.P. (T) No. 7467 of 2025 dated 21.01.2026

Author: Saket Shaw