The Kerala High Court has reaffirmed significant relief for GST-registered taxpayers by holding that the extension of the due date for filing September returns up to 30 November should be treated as retrospectively applicable from the inception of GST on July 1, 2017.
The bench of Justice Dinesh Kumar Singh permitted eligible taxpayers to seek the benefit of CBIC circulars that facilitate Input Tax Credit (ITC) claims in genuine cases where suppliers had either failed to correctly report transactions or had committed technical errors.
The batch of petitions covered three broad categories of taxpayers.
The first category consisted of businesses where the suppliers had actually remitted GST to the Government but the tax did not get reflected in their GSTR returns because of technical or procedural issues.
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The second category comprised taxpayers who had genuinely purchased goods or services, possessed valid tax invoices, and had paid the entire consideration including GST to their suppliers. However, the suppliers failed to deposit the tax with the Government, leading to denial of ITC to the recipients.
The third category involved cases where taxpayers merely possessed invoices but could not establish actual receipt of goods or payment of consideration and tax, making their entitlement to ITC doubtful.
Instead of examining every individual writ petition separately, the High Court adopted the reasoning and conclusions contained in its earlier decision delivered on June 4, 2024, involving identical legal issues.
The Court observed that the Government itself had acknowledged the practical difficulties faced by taxpayers during the initial implementation of the GST regime. Recognising these hardships, the CBIC had issued Circular No. 183/15/2022-GST dated December 27, 2022, and Circular No. 193/05/2023-GST dated July 17, 2023, providing a mechanism for granting ITC relief in bona fide cases.
The High Court held that taxpayers who were otherwise eligible to claim the benefit of these circulars but had failed to do so within the prescribed period should not lose the benefit merely because their writ petitions remained pending before the Court.
Accordingly, the Court granted liberty to such taxpayers to approach the appropriate GST authorities within 30 days from the date of the judgment to seek relief under the applicable CBIC circulars.
The GST authorities were directed to examine each taxpayer’s case individually and extend the benefit wherever the conditions prescribed in the circulars are satisfied.
One of the most significant aspects of the judgment relates to the statutory time limit for claiming Input Tax Credit.
The Court noted that before the Finance Act, 2022 amended Section 39 of the GST law, taxpayers were generally required to file the relevant September return by 30 September. Subsequently, the Legislature extended this timeline to 30 November in order to address practical difficulties experienced during GST implementation.
The High Court held that this amendment was merely procedural in nature and intended to facilitate compliance rather than impose new substantive conditions.
Consequently, it ruled that the extended deadline of 30 November should be treated as applicable retrospectively from July 1, 2017. As a result, taxpayers who filed their September returns on or before November 30 and claimed ITC within that extended period cannot be denied credit solely because the returns were not filed by the earlier deadline.
While granting substantial procedural relief, the High Court declined to interfere with the constitutional validity of the GST provisions governing Input Tax Credit.
The Court specifically rejected the challenge to Section 16(2)(c), which links ITC entitlement to payment of tax by the supplier, as well as Section 16(4), which prescribes the statutory limitation period for availing ITC.
The High Court disposed of all the connected writ petitions by extending the benefit of its earlier judgment.
Eligible taxpayers were granted one month to approach the appropriate GST authorities under the applicable CBIC circulars. The authorities have been directed to examine each claim on its own merits and process admissible ITC claims accordingly.
The Court further directed that, for the relevant period beginning July 1, 2017, taxpayers who furnished their September GST returns on or before 30 November should have their Input Tax Credit claims processed if they are otherwise eligible under the GST law. All pending interlocutory applications were also closed.Â
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