Facts of the Case

Rajashekhar Tammanna Bharamoji, a contractor holding GST No.29AIXPB1201F1ZJ, challenged the constitutional validity of Section 16(4) of the CGST/SGST Act, 2017 read with Rule 61 of the KGST Rules, and an order dated 19.06.2024 passed under Section 73(9) for the tax period 2021-22 confirming a demand along with interest and penalty. Rather than pressing the constitutional challenge, the petitioner sought the benefit of retrospectively inserted Section 16(5), introduced by the Finance (No.2) Act, 2024 with effect from 01.07.2017, which permits input tax credit claims for FY 2017-18 to 2020-21 where the return was filed by 30 November 2021 — a benefit already extended in a co-ordinate Bench ruling on near-identical facts.

Issues Involved

  1. Whether the petitioner is entitled to invoke Section 16(5) of the CGST Act — inserted with retrospective effect — to claim input tax credit that would otherwise be time-barred under Section 16(4).
  2. Whether the Section 73(9) order should be set aside and the matter relegated to the show cause notice stage to enable this claim.
  3. Whether the constitutional-validity challenge to Section 16(4) needed to be separately adjudicated given the availability of the Section 16(5) remedy.

Petitioner's Arguments

  • Relied on the co-ordinate Bench decision in M/s. Sadhana Enviro Engineering Services v. The Joint Commissioner of Central Tax, which had granted identical relief on near-identical facts by relegating the assessee to the SCN stage to claim the Section 16(5) benefit.
  • Submitted that returns claiming the input tax credit had admittedly been filed before 30 November 2021, entitling the petitioner to the benefit of the retrospective amendment in adjudicating the pending show cause notice.
  • Did not press the constitutional validity challenge, seeking instead only the benefit already recognised by the co-ordinate Bench.

Respondent's Arguments

  • The learned AGA for the respondents did not dispute that the petitioner was entitled to claim the benefit of Section 16(5) of the KGST Act, inserted pursuant to the Finance (No.2) Act, 2024.

Court Order / Findings

  • The Court, without going into the correctness of the delay-condonation refusal or the constitutional challenge, applied its own reasoning in Sadhana Enviro Engineering Services on all fours to the present facts.
  • Held that the writ petition be partly allowed, setting aside the Section 73(9) order and relegating the parties to the stage of the show cause notice, with a direction to grant the petitioner the benefit of Section 16(5) subject to satisfying the department regarding entitlement to credit.
  • Directed the petitioner to appear before the assessing authority on a fixed date without requiring any further notice, and permitted a further reply to the show cause notice, in addition to what was already filed.
  • Left open all contentions available to the petitioner under law in response to the show cause notice.

Important Clarification

  • The retrospectively inserted Section 16(5) of the CGST Act (Finance (No.2) Act, 2024, effective from 01.07.2017) overrides the ordinary Section 16(4) time limit for claiming input tax credit for FY 2017-18 to 2020-21, provided the relevant return was filed by 30 November 2021.
  • Courts are relegating such assessees to the show cause notice stage for reassessment of the ITC claim in light of Section 16(5), rather than independently ruling on the constitutional validity of Section 16(4) itself, once the retrospective relief renders that challenge largely academic on the facts.

Sections Involved

  • Section 16(4), CGST/KGST Act, 2017 – prescribes the original time limit for availing input tax credit.
  • Section 16(5), CGST Act, 2017 – retrospectively inserted extended time limit for ITC for FY2017-18 to 2020-21.
  • Section 73(9), CGST Act, 2017 – governs the final order determining tax, interest and penalty after considering the taxpayer's representation.
  • Section 107(4), CGST Act, 2017 – prescribes the outer limit for condonation of delay in filing appeals, which had earlier defeated the petitioner's appeal.

Decision – In Favour of

Partly allowed in favour of the assessee — the Section 73(9) order and the appellate rejection were both set aside, with the matter relegated to the show cause notice stage for grant of the Section 16(5) input tax credit benefit, subject to the petitioner substantiating entitlement.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: Writ Petition No. 102834 of 2025 (T-RES)
  • Coram: Hon'ble Mr. Justice M. Nagaprasanna
  • Date of Order: 04 December 2025

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