Facts of the Case

The petitioner, Tvl. Bright Business Staffing Solutions (GSTIN 33AXLPS8229F2Z4), challenged an assessment order dated 23.04.2024 for FY 2018-19 passed under Section 73 of the TNGST/CGST Act, 2017, arising from reversal of Input Tax Credit availed beyond the time limit prescribed in Section 16(4). By the time the matter reached hearing, Parliament had enacted a retrospective amendment — Section 16(5), inserted with effect from 1 July 2017 by the Finance (No.2) Act, 2024 — entitling registered persons to claim ITC for invoices/debit notes of FY 2017-18 to 2020-21 if claimed in a return filed up to 30 November 2021, directly bearing on the petitioner's case.

Issues Involved

  1. Whether an assessment order reversing ITC under Section 16(4) for FY 2018-19, passed before the retrospective insertion of Section 16(5), should be reconsidered in light of the new provision.
  2. What relief is appropriate for pending or already-decided matters affected by this retrospective legislative change.

Petitioner's Arguments

  • The impugned order reversing ITC was cryptic, non-speaking, barred by limitation and passed without jurisdiction in view of the newly inserted Section 16(5) of the TNGST Act, which specifically extends the ITC availment deadline for FY 2018-19 to returns filed up to 30 November 2021.
  • The order deserved to be quashed and a fresh assessment order passed after affording an opportunity of hearing, applying the benefit of Section 16(5).

Respondent's Arguments

  • The Additional Government Pleader appeared for the respondent; the order does not record any independent objection distinguishing the case from the Court's own recent ruling in Sagar Brush Industries on the identical Section 16(5) issue.

Court Order / Findings

  • The Court relied on its own recent decision in Sagar Brush Industries v. State Tax Officer, which had already set aside similar assessment and appellate orders confirming ITC reversal for FY 2017-18 to 2020-21, holding that Parliament, through Clause 114 of the Finance (No.2) Bill, 2024 (enacted as Section 16(5)), had extended an "olive branch" to taxpayers who availed delayed ITC for those years, subject to the no-refund rider in Clause 146 for tax already paid or credit already reversed.
  • Following this reasoning, the Court set aside the impugned Section 73 order and remitted the case to the Assessing Officer to pass a fresh order strictly in accordance with the Finance Act, 2024, extending the benefit of Section 16(5) to the petitioner if the statutory conditions are satisfied.
  • The writ petition was disposed of on the same terms as Sagar Brush Industries, without costs.

Important Clarification

  • Section 16(5) of the CGST/TNGST Act, inserted retrospectively with effect from 1 July 2017 by the Finance (No.2) Act, 2024, entitles registered persons to avail ITC for invoices/debit notes pertaining to FY 2017-18 through 2020-21 in any return filed up to 30 November 2021, overriding the ordinary Section 16(4) time bar for that window.
  • Assessment or appellate orders reversing ITC for these years on limitation grounds under Section 16(4) alone are liable to be set aside and remitted for reconsideration in light of Section 16(5), though no refund is available for tax already paid or credit already reversed before the amendment (the Clause 146 rider).

Sections Involved

  • Section 16(5), CGST/TNGST Act, 2017 – retrospective extension of the ITC availment deadline for FY 2017-18 to 2020-21, inserted by the Finance (No.2) Act, 2024.
  • Section 16(4), CGST/TNGST Act, 2017 – ordinary time limit for availing ITC, under which the original reversal was made.
  • Section 73, CGST/TNGST Act, 2017 – underlying demand provision for the impugned order.

Decision – In Favour of

In favour of the assessee — the order was set aside and remitted for fresh assessment extending the benefit of the retrospective Section 16(5) amendment.

Case Details

Madurai Bench of Madras High Court; W.P(MD)No.33982 of 2025 with W.M.P(MD)No.26819 of 2025; Coram: Hon'ble Mr Justice G.R. Swaminathan; Date: 26.11.2025.

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