Facts of the Case

The petitioner challenged Notification No. 09/2023-Central Tax dated 31.03.2023, a show cause notice dated 05.12.2023, and a demand order dated 20.02.2024, raised on four heads: reconciliation of GSTR-01 with GSTR-3B, excess ITC on account of non-reconciliation in GSTR-3B, excess ITC availed compared to tax on inward supplies declared by suppliers, and invalid ITC under Section 16(4) of the CGST Act. The challenge to the Notification was not pressed, being left subject to the outcome of the Supreme Court proceedings in M/s HCC-SEW-MEIL-AAG JV v. Assistant Commissioner of State Tax & Ors. Of the SCN grounds, the reconciliation ground was dropped in the impugned order, but the ITC for February and March 2019 was rejected under Section 16(4) for having been claimed beyond the prescribed period.

Issues Involved

  1. Whether ITC claimed for Financial Year 2018-19, in returns filed by 30 November 2021, was validly rejected as time-barred under Section 16(4) of the CGST Act, in light of the retrospective extension under Section 16(5).
  2. Whether the mandatory pre-deposit for filing a statutory appeal ought to be waived given the prima facie strength of the petitioner's case.

Petitioner's Arguments

  • The ITC relating to February and March 2019 (Financial Year 2018-19) was rejected under Section 16(4) as being claimed beyond the prescribed period, but Section 16(5) of the Act extends the limitation for taking ITC for Financial Years 2017-18 to 2020-21 up to 30 November 2021.
  • The petitioner was willing to avail the appellate remedy under Section 107 but sought waiver of pre-deposit given the substantial ITC amount at stake.

Respondent's Arguments

  • The Department submitted that the impugned order was appealable under Section 107 of the Act and that the petitioner ought to be relegated to that remedy rather than have the writ court decide the ITC dispute.

Court Order / Findings

  • The Court examined the Adjudicating Authority's own reasoning, which had rejected ITC on returns filed on 25.10.2019 for February and March 2019 by treating 20.10.2019 as the cut-off under Section 16(4), without reference to the retrospective extension.
  • The Court held that since the relevant financial year was 2018-19, and Section 16(5) clearly extends the period for taking ITC for that year up to 30 November 2021, the Adjudicating Authority's reasoning was prima facie not sustainable, though it declined to make a final ruling since the order was appealable.
  • Given the prima facie view that the petitioner was entitled to credit/refund of the ITC, the Court waived the pre-deposit requirement, left all rights and contentions open, and directed the petitioner to approach the Appellate Authority by 15th October 2025, which would decide without being influenced by the Court's observations and subject to the outcome of the pending SLP on the notification's validity.
  • Portal access was directed to be restored within a week to enable the petitioner to download necessary documents.

Important Clarification

  • Section 16(5) of the CGST Act, inserted to retrospectively extend the ITC-claim deadline for Financial Years 2017-18 through 2020-21 up to 30 November 2021, overrides the ordinary Section 16(4) cut-off, and an adjudication order that ignores this extension while rejecting ITC for these years is prima facie unsustainable.
  • In an appropriate case where the assessee's claim appears prima facie meritorious on a pure point of law, courts may waive the mandatory statutory pre-deposit for the Section 107 appeal even while relegating the assessee to the appellate forum on merits.

Sections Involved

  • Section 16(4) of the Central Goods and Services Tax Act, 2017 — ordinary time-limit for availing input tax credit.
  • Section 16(5) of the CGST Act, 2017 — retrospective extension of the ITC-claim deadline for FY 2017-18 to 2020-21 up to 30 November 2021.
  • Section 107 of the CGST Act, 2017 — statutory appeal remedy, including pre-deposit, which was waived in this case.

Decision – In Favour of

Disposed of substantially in favour of the Assessee; pre-deposit was waived and the matter was relegated to the Appellate Authority, with the Court noting the Section 16(4) reasoning was prima facie unsustainable in view of Section 16(5).

Case Details

Court: High Court of Delhi at New Delhi
Case No.: W.P.(C) 8206/2024
Coram: Justice Prathiba M. Singh and Justice Shail Jain
Date of Decision: 19th August, 2025

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