Kabriyal Rajan (Prop: Pitha Hardware) Vs Supertintendent
Date: December 2, 2025
Subject Matter
Input Tax Credit Allowed Despite Late Return Filing Due to Retrospective Statutory Amendment
Summary
The writ petition is allowed, and the impugned order in DRC-07, which denied Input Tax Credit (ITC) for late filing of returns, is set aside. The Court held that retrospective statutory amendments and clarifying circulars make the ITC a substantive benefit that cannot be denied due to procedural lapses, remitting the case for fresh consideration on merits.
Summary of Facts and Dispute:
- Impugned Action: The impugned order in Original No.1/2024-25(GST)-Range-III-Amb dated 10.04.2024 in DRC-07 and the summary demand dated 29.03.2025 were passed by the Respondent, denying Input Tax Credit (ITC) to the petitioner for the tax period 2018-2019.
- Petitioner's Argument: The petitioner's Input Tax Credit was denied on the sole ground of failure to file returns in time. However, the petitioner argued that the issue is settled in their favor due to the retrospective insertion of Sections 16(5) and 16(6) to the GST enactments and clarification provided by Circular No. 237/31/2024-GST.
- Core Question of Law: Whether Input Tax Credit can be denied merely due to procedural lapses such as late filing of returns, especially when substantive statutory amendments (Sections 16(5) and 16(6)) and clarifying circulars permit such credit retrospectively.
Key Legal Issues & Findings:
Interpretation of Statutory Amendments and Circular on Input Tax Credit
The Court relied on the well-established principles laid down by the Hon’ble Supreme Court that procedure is the handmaid of justice, not its mistress, and substantive benefits should not be denied due to mere procedural lapses. The Court's findings included:
- Retrospective Statutory Intervention: Sections 16(5) and 16(6) were inserted into the respective GST enactments via the Finance (No.2) Act, 2024, with retrospective effect from 01.07.2017, affirming the entitlement to Input Tax Credit despite initial procedural shortcomings.
- Clarification by Circular: Circular No. 237/31/2024-GST, dated 15.10.2024, specifically Para 3.5, clarifies that where demand for wrong availment of input tax credit was confirmed under Section 73, 74, 107, or 108 of the CGST Act, but such credit is now available under Section 16(5) or 16(6), taxpayers may apply for rectification under Section 148 of the CGST Act.
- Substantive Benefit Principle: The Court emphasized that the Input Tax Credit, being a substantive benefit made available by the statutory provisions, cannot be denied merely on account of procedural lapses like late filing of returns.
Ruling:
- Outcome: The impugned order in Original No.1/2024-25(GST)-Range-III-Amb dated 10.04.2024 in DRC-07 and the summary demand dated 29.03.2025 are set aside.
- Directions: The case is remitted back to the respondent to pass a fresh order on merits, disregarding procedural objections, in light of Circular No. 237/31/2024-GST. The respondent shall also pass appropriate orders to regularize the default in filing returns, provided the petitioner produces requisite documents to substantiate the Input Tax Credit claim.
- Liberty: The petitioner is granted liberty to file a supplementary application seeking rectification of the impugned order, which the respondent shall dispose of in accordance with law.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
This writ petition has been disposed of at the time of admission after hearing the learned counsel for the petitioner and the learned counsel for the respondent.
2. In this writ petition, the petitioner has challenged the impugned order in Original No.1/2024-25(GST)-Range-III-Amb dated 10.04.2024 in DRC-07 and the summary demand dated 29.03.2025 passed by the Respondent for the tax period 2018-2019.
3. The reading of the impugnd order prima facie indicates that the petitioner had been denied the Input Tax Credit on the ground that the petitioner failed to file the Returns in time.
4. However, the issue is settled in favour of the petitioner in view of the statutory intervention by insertion of Sections 16(5) and 16(6) to the respective GST enactments by of the Act with insertion of Section 16(5) to the respective GST enactments vide SO 4253(E) with retrospective effect from 01.07.2017 inserted by Finance (No.2) Act, 2024 (15 of 2024) dated 16.08.2024.
5. The petitioner is prima facie entitled to the Input Tax Credit as clarified in Circular No.237/31/2024-GST, dated 15.10.2024.
4. In Para 3.5 of the said circular, it is clarified under:
3.5 Where order under Section 73 or section 74 of the CGST Act has been issued but no appeal against the said order has been filed with the Appellate Authority, or where the order under section 107 or section 108 of the CGST Act has been issued by the Appellate Authority or the Revisional Authority but no appeal against the said order has been filed with the Appellate Tribunal:
In such cases, where any order under section 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input CGST Act, but where such input tax credit is now available as per the provisions of sub-section(5) or sub-section(6) of section 16 of the CGST Act, and where appeal against the said order has not been filed, the concerned taxpayer may apply for rectification of such order under the special procedure under section 148 of the CGST Act notified vide Notification No.22/2024-Central tax dated 08.10.2024, within a period of six months from the date of issuance of the said notification.
5. This Court has taken a categorical view that the Input Tax Credit having been made available by virtue of the statutory provisions referred to above is a substantive benefit and should not be denied merely on account of procedural lapses, following the well-established principles laid down by the Hon’ble Supreme Court that procedure is the handmaid of justice and not its mistress. Therefore, the impugned order is set aside and the case is remitted back to the respondent to pass a fresh order on merits, de hors the procedural objections, in light of the above circular.
6. As long as the petitioner produces requisite documents to substantiate that the petitioner has rightly claimed the Input Tax Credit and considering the fact that the petitioner failed to file the returns within the prescribed period, the respondent shall pass appropriate orders to regularize the default in filing the returns in view of the statutory intervention.
7. The petitioner may file a supplementary application seeking rectification of the impugned order, and in case such an application is filed by the petitioner, the same shall be disposed of in accordance with law by the Respondent.
8. The Writ Petition is disposed of with the above observations. No costs. Connected W.M.Ps are closed.