High Court Sets Aside GST ITC Reversal Order in Light of Finance Act 2024 Amendments

Sai Bharath Gas Agency, represented by its proprietor S. Jothi, challenged an assessment order dated 01.04.2024 issued under Section 73 of the CGST Act for FY 2018-19. The dispute centered on reversal of input tax credit under Section 16(4), with the petitioner arguing that the law underwent significant change through the Finance Act, 2024. The amendments, particularly the insertion of Section 16(5), created a statutory window allowing taxpayers to avail ITC for earlier years up to 30.11.2021.

The petitioner contended that the assessment order ignored this legislative relief and therefore required reconsideration.

Main Issue: Whether the assessment reversing ITC under Section 16(4) should be quashed and reconsidered in light of the amended Section 16(5) introduced through the Finance Act, 2024.

HC Decided: The Court held that the petitioner’s case was indistinguishable from Sagar Brush Industries and that the reasoning in that judgment applied squarely. The Court observed that Parliament has expressly relaxed timelines for availing ITC for FYs 2017-18 to 2020-21 by inserting subsections (5) and (6) into Section 16, with retrospective effect from 01.07.2017. This legislative development directly impacts assessments based on delayed ITC and cannot be overlooked by taxing authorities.

Therefore, the Court set aside the impugned order dated 01.04.2024 and remitted the matter to the Assessing Officer to pass a fresh order strictly in accordance with the amended law. The officer was directed to extend the benefit of Clauses 114 and 146 of the Finance Bill, 2024 if enacted in the Finance Act, 2024. The writ petition was disposed of on these terms, with no order as to costs.

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