The Delhi High Court has waived the mandatory pre-deposit requirement while permitting the company to approach the Appellate Authority to challenge a demand order denying its input tax credit (ITC) for the financial year 2018–19.
The bench comprising Justice Prathiba M. Singh and Justice Shail Jain observed that the adjudicating authority’s reasoning in rejecting the ITC claim appeared prima facie unsustainable, as it failed to consider the extended limitation period provided under Section 16(5) of the Central Goods and Services Tax (CGST) Act, 2017.
The petitioner/assessee, Heal Health Connect Solutions Pvt. Ltd. has challenged the Notification No. 09/2023 – Central Tax dated March 31, 2023, the Show Cause Notice (SCN) and the Demand Order dated February 20, 2024.
At the outset, the petitioner clarified that the challenge to the notification was not being pressed and would instead be subject to the outcome of a related case pending before the Supreme Court — M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. (SLP No. 4240/2025).
The dispute primarily revolved around the rejection of ITC for February and March 2019, on the grounds that the corresponding GST returns were filed beyond the prescribed deadline.
The adjudicating authority held that ITC claimed after October 20, 2019 — the due date for filing returns for FY 2018–19 — was invalid under Section 16(4) of the CGST Act. Consequently, the authority demanded recovery of approximately ₹7.29 lakh in ITC.
However, the High Court noted that the Finance Act, 2022 introduced Section 16(5), which expressly extended the limitation period for availing ITC for FY 2018–19 until November 30, 2021. Therefore, the court observed that the rejection of ITC based on the earlier cutoff date was prima facie erroneous.
The court remarked that the legislative amendment under Section 16(5) clearly allowed ITC claims till November 30, 2021. Accordingly, the reasoning adopted by the adjudicating authority could not stand scrutiny.
However, since the order under challenge was appealable under Section 107 of the CGST Act, the Court declined to adjudicate the issue on merits. Instead, it directed the petitioner to approach the Appellate Authority by October 15, 2025, granting significant procedural relief recognizing that the petitioner appeared entitled to ITC, the Court waived the mandatory pre-deposit requirement for filing the appeal.
The Court directed the authorities to restore portal access within one week to enable the company to download necessary documents for appeal. The appeal, if filed within the stipulated time, would not be dismissed on limitation grounds and must be decided on merits.
The Court also made it clear that the final outcome of the petitioner’s appeal would be subject to the Supreme Court’s decision in the HCC-SEW-MEIL-AAG JV case.
Case Details
Case Title: Heal Health Connect Solutions Private Limited Versus Commissioner Delhi Goods And Services Tax
Case No.: W.P.(C) 8206/2024
Date: 19/08/2025
Counsel For Petitioner: Rakesh Kumar
Counsel For Respondent: K.G. Gopalakrishnan
Read More: Bombay HC Warns Customs: Resolve Classification Dispute or Face Consequences
