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2025 Supreme(Sikk) 79

THE HIGH COURT OF SIKKIM: GANGTOK
Bhaskar Raj Pradhan, J.
M/S A2Z Infra Engineering LTD. - Petitioner
Versus
The Union of India, Represented by the Secretary, to the Government of India, Ministry of Finance Department of Revenue, New Block, New Delhi - Respondents
W.P. (C) No. 25 of 2024
Decided On : 11-04-2025

Advocates Appeared:
For the Petitioner:Mr. Ketan Jain and Mr. Chetan Kumar Shukla, Advocates (through V.C.). Mr. Passang Tshering Bhutia,
For the Respondent:Ms. Sangita Pradhan, Deputy Solicitor General of India (through V.C.) along with Ms. Sittal Balmiki, Advocate, Mr. Manish Kr. Jain, Advocate

Retrospective legislative amendments extending the time limit for availing input tax credit render demand orders based on previously expired statutory deadlines invalid and unsustainable.

Headnote:(A) Central Goods and Services Tax Act, 2017 - Section 16(4) - Finance (No. 2) Act, 2024 - Section 118 - Input Tax Credit - Retrospective extension of time limits - Challenge to demand order for irregular availing of credit beyond statutory cut-off dates - Government notification and circular clarifying retrospective applicability of amended provisions - Whether retrospective extension of time to avail input tax credit renders prior demand orders unsustainable. (Paras 1, 2, 3 and 5)

Facts of the case:
The petitioner challenged an order demanding the reversal of input tax credit availed for specific financial years, on the ground that the credit was claimed beyond the statutory deadlines prescribed under the relevant tax legislation. During the pendency of the writ petition, the respondent authorities brought on record a notification and a circular issued under new legislative provisions, which retrospectively extended the time limits for availing such input tax credit.

Findings of Court:
The court observed that the legislative amendments, as clarified by the subsequent circular, retrospectively extended the timeframe for availing input tax credit. The respondents, acknowledging these amendments, conceded that the petitioner was entitled to the credit that was previously denied. Consequently, the basis for the demand order no longer existed.

Issues: The main issue was whether a demand for the reversal of input tax credit, predicated on expired statutory time limits, remains legally enforceable following a retrospective legislative amendment extending such time limits.

Ratio Decidendi: Retrospective legislative amendments that extend the time limit for availing input tax credit supersede prior restrictive interpretations of statutory deadlines. Adherence to such amendments is mandatory, and demands for credit reversal that run contrary to these retrospective provisions are untenable and must be quashed.

Result: Petition allowed; impugned order quashed.

Table of Content
1. dispute over itc entitlement under cgst time-limit provisions. (Para 1 , 2)
2. retrospective extension of itc time limits via recent finance act amendments. (Para 3 , 4)
3. writ petition allowed following state concession of statutory relief. (Para 5)

JUDGMENT :

Bhaskar Raj Pradhan, J.

1. The present writ petition seeks various directions upon the respondents. Essentially the petitioner is aggrieved by the impugned Order dated 21.03.2024 by which the respondents have raised demands upon the petitioner as detailed therein. These demands were raised on the ground that as per Section 16(4) of the Central Goods & Services Tax Act, 2017 (the CGST Act, 2017) last date for availing ITC for the Financial Year 2018-19 was 30.11.2019 and for the Financial Year 2019-20 was 30.11.2020. But the petitioner filed their GSTR 3B return for the corresponding months and accordingly availed ITC to the tune of Rs.2,95,58,264/- for the Financial Year 2018-19 and ITC to the tune of Rs.3,14,75,010 for the Financial Year 2019-2020 after the cut-off dates. Therefore, the respondents, in their considered view, raised the demand for irregularly availing ITC as indicated above.

2. The respondent nos.1 to 6 have now placed an affidavit on record dated 25.03.2025 bringing on record a Notification bearing No.17/2024-Central Tax dated 27.09.2024 and Circular No.237/31/2024-GST dated 15.10.2024. It is seen that by the Notification No.17/2024-Central Tax dated 27.09.2024, 27.09.2024 is the relevant date on which the provisions of Sections 118 , 142, 148 and 150 of the Finance (No. 2) Act, 2024 (15 of 24) shall come into force.

3. Circular dated 15.10.2024 clarifies that sub-section (5) and sub-section (6) of Section 16 of the CGST Act, 2017 inserted under Section 16 of the CGST Act, 2017, with effect from the 1^st day of July, 2017, vide Section 118 of the Finance (No.2) Act, 2024 the time limit to avail input tax credit under provisions of sub-section (4) of Section 16 of the CGST Act, 2017 has been retrospectively extended in certain specified cases.

4. The learned Deputy Solicitor General of India representing respondent nos. 1 to 6 submits that in view of the notification and the circular above, the petitioner is now entitled to the Input Tax Credit that was denied to them by the impugned order.

5. In view of the categorical stand taken by the respondents, the writ petition is liable to be allowed and the impugned order quashed. It is accordingly so ordered.

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2025 Supreme(Sikk) 79

Retrospective legislative amendments extending the time limit for availing input tax credit render demand orders based on previously expired statutory deadlines invalid and unsustainable.

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