The Calcutta High Court has quashed a GST adjudication order involving a demand of ₹1,18,35,089 for the financial year 2018-19, holding that the taxpayer could not be denied the benefit of the retrospective amendment introduced by Section 16(5) of the Central Goods and Services Tax Act, 2017. 

The bench of Justice Smita Das De observed that where the relevant returns were filed by November 30, 2021, the Input Tax Credit (ITC) for the relevant period stood regularised under the amended provision.

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The matter arose from a writ petition challenging the legality and sustainability of an adjudication order passed under Section 73 of the CGST Act for FY 2018-19.

The petitioner/assessee contended that the authorities had denied ITC despite the subsequent insertion of Section 16(5) into the CGST Act through the Finance (No. 2) Act, 2024. The amendment was given retrospective effect from July 1, 2017 and introduced a special mechanism for regularising ITC for specified financial years.

The dispute before the Court essentially concerned whether the petitioner could claim the benefit of the amended Section 16(5) even though the adjudication order had already been passed.

Section 16(5) provides a specific relaxation notwithstanding the general restriction contained in Section 16(4). For invoices or debit notes relating to FY 2017-18, 2018-19, 2019-20 and 2020-21, a registered person is entitled to avail ITC in a return furnished under Section 39 if the return was filed up to November 30, 2021.

The provision was inserted retrospectively with effect from July 1, 2017.

The Court noted that the amendment was particularly relevant because the petitioner’s GSTR-3B returns for April 2018 to March 2019 had been filed before November 30, 2021.

According to the petitioner, although the returns were filed after their original due dates, they were nevertheless filed within the extended cut-off date specifically recognised by the amended Section 16(5). Therefore, the petitioner argued that the ITC could no longer be denied merely because the original returns had been filed belatedly.

The record before the High Court showed that the respondent authority had imposed a demand of ₹1,18,35,089 on the petitioner for FY 2018-19 through the order-in-original dated April 19, 2024.

Despite the retrospective amendment to Section 16, the authorities had proceeded with the demand.

The petitioner therefore approached the High Court contending that the adjudication order had failed to take into account the statutory benefit subsequently made available under Section 16(5).

The petitioner specifically relied upon the fact that the relevant GSTR-3B returns had been filed before the November 30, 2021 cut-off date.

The petitioner also relied upon an earlier decision of a coordinate Bench of the Calcutta High Court in Hiranmoy Dutta v. State of West Bengal, reported in [2025] 172 taxmann.com 750 (Calcutta).

In that case, ITC had been disallowed because the taxpayer had filed GSTR-3B returns beyond the original due dates. However, following the insertion of Section 16(5), the returns covering the relevant tax periods were treated as regularised because they had been filed within the newly prescribed cut-off date.

The earlier Bench had held that the taxpayer could not be denied the benefit of the amendment where the statutory conditions under Section 16(5) were satisfied.

The petitioner argued that the same principle applied to the present case, particularly because the returns for April 2018 to March 2019 had been filed before November 30, 2021.

The respondent authorities opposed the petitioner’s claim.

The department argued that the petitioner’s case did not squarely fall within the inserted provision and that the adjudication order had already been passed by the competent authority.

The department contended that Section 16(5) could not be used to reopen a concluded assessment. It was also submitted that the benefit of the amendment was conditional upon filing the relevant return by the prescribed cut-off date.

The High Court found that the petitioner had made out a prima facie case warranting interference.

The Court specifically held that, by virtue of the amendment to Section 16, the petitioner could not be denied the benefit of the newly inserted provision.

Importantly, the Court characterised the amendment as curative and retrospective with effect from July 1, 2017.

The Court also found the ratio of the earlier decision in Hiranmoy Dutta to be directly applicable to the present dispute.

The Court observed that once the returns had been filed by November 30, 2021, the ITC relating to April 2018 to March 2019 stood regularised under Section 16(5).

Thus, the mere fact that the returns had been filed beyond their original due dates could not, by itself, justify denial of ITC when the subsequently introduced statutory cut-off had been complied with.

The finding effectively required the tax authorities to reconsider the demand in light of the retrospective amendment rather than applying the earlier time restriction without taking Section 16(5) into account.

In view of its findings, the Calcutta High Court quashed and set aside the order dated April 19, 2024.

The writ petition was accordingly allowed and disposed of.

However, the Court did not finally determine the taxpayer’s entitlement without verification. Instead, it directed that the order-in-original be re-adjudicated by the Joint Commissioner in light of Section 16(5).

The authority has been directed to verify the dates on which the petitioner’s GSTR-3B returns were filed before taking the matter up for fresh adjudication.

The High Court directed the Joint Commissioner to complete the re-adjudication within six weeks after verifying the dates of filing of the relevant GSTR-3B returns.

In the meantime, the respondent authorities have been restrained from taking any coercive steps against the petitioner until the re-adjudication is completed.

The Court also clarified that since no affidavit had been called for, the allegations contained in the writ petition would not be treated as having been admitted by the respondents.

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