Facts of the Case

The petitioner, M/s.NM Construction, challenged an Order-in-Original No.06/2023 dated 21.12.2023 passed under Section 73 of the CGST Act for the assessment period July 2017 to March 2019, relating to reversal of input tax credit under Section 16(4) of the Act. The petitioner sought quashing of the order in light of the newly inserted Section 16(5) of the CGST Act (as amended by the Finance (No.2) Act, 2024) and a direction for fresh assessment after affording an opportunity of hearing.

Issues Involved

  1. Whether the retrospective insertion of Section 16(5) into the CGST Act, extending the time limit for availing input tax credit for FY 2017-18 to 2020-21, entitled the petitioner to have the impugned Section 73 order (based on Section 16(4) time-bar) reconsidered.
  2. Whether such benefit should be examined by the original authority afresh rather than by the writ court.

Petitioner's Arguments

  • The impugned order, premised on reversal of ITC for delay under Section 16(4), ought to be reconsidered in light of the newly inserted Section 16(5) and Section 16(6) of the CGST Act, which grant taxpayers an extended window (up to 30.11.2021 returns) to avail ITC for FY 2017-18 to 2020-21.

Respondent's Arguments

  • Learned counsel appearing for the respondent Department did not seriously contest the applicability of the newly amended provisions, in view of an existing coordinate-bench precedent covering the same issue.

Court Order / Findings

  • The Court relied on its earlier ruling in Sagar Brush Industries v. State Tax Officer, Assistant Commissioner (ST), Madurai — (2024) 21 Centax 512 (Mad.) — where, under similar circumstances, assessment orders and appellate orders confirming ITC reversal under Section 16(4) were set aside in light of Clauses 114 and 146 of the Finance (No.2) Bill, 2024.
  • Clause 114 inserts Section 16(5) into the CGST Act (with effect from 01.07.2017), entitling a registered person to take input tax credit in respect of invoices/debit notes for FY 2017-18 to 2020-21 in any return filed up to 30.11.2021, and Section 16(6) extends similar relief where registration cancelled under Section 29 is subsequently revoked.
  • Clause 146 of the Finance (No.2) Bill, 2024 clarifies that no refund shall be made of tax already paid or ITC already reversed on account of the pre-amendment position.
  • Following Sagar Brush Industries, the impugned order was set aside and the matter was remitted to the Assessing Officer to pass a fresh order on merits strictly in accordance with the Finance Act, 2024, extending the benefit of Sections 16(5) and 16(6) if the petitioner is otherwise entitled.

Important Clarification

  • The retrospective insertion of Section 16(5) and 16(6) into the CGST Act via the Finance (No.2) Act, 2024, operates to save input tax credit availed within the extended window (returns filed up to 30.11.2021) for FY 2017-18 to 2020-21, and courts have been consistently remitting pending Section 73/16(4) ITC-reversal matters for fresh assessment to apply this beneficial amendment, rather than deciding entitlement themselves.
  • The benefit does not translate into a refund of tax already paid or ITC already reversed prior to the amendment — Clause 146 of the Finance (No.2) Bill, 2024 expressly bars such refunds.

Sections Involved

  • Section 16(4), CGST Act, 2017 – time limit for availing ITC, breach of which founded the original demand.
  • Section 16(5) and 16(6), CGST Act, 2017 (inserted by Finance (No.2) Act, 2024, w.e.f. 01.07.2017) – extend the ITC availment window for FY 2017-18 to 2020-21 and for cases of revoked registration cancellation.
  • Section 73, CGST Act, 2017 – provision under which the original Order-in-Original was passed.

Decision – In Favour of

The petition is disposed of in favour of the Assessee. The impugned order is set aside and the matter remitted for fresh assessment applying the retrospective Section 16(5)/16(6) relief.

Case Details

  • Court: Madurai Bench of Madras High Court
  • Case No.: W.P(MD) No.34128 of 2025 with W.M.P(MD) Nos.26964 & 26965 of 2025
  • Coram: Hon'ble Mr. Justice G.R. Swaminathan
  • Date of Order: 27.11.2025

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