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Sesame Technologies Pvt Ltd Vs Deputy State Tax Officer

Date: January 5, 2026

Court: High Court
Bench: Kerala
Type: Writ Petition
Judge(s)/Member(s): GOPINATH P
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Subject Matter

Input Tax Credit Denial Under Section 16(4) Set Aside Due to Section 16(5) Notification

Input Tax Credit

Summary

The High Court has set aside an order dated 10.06.2024, which denied the petitioner input tax credit for the financial year 2019-20 under Section 16(4) of the CGST/SGST Acts. The Court held that the petitioner is now entitled to the benefit of input tax credit due to the subsequent notification of Section 16(5) of the CGST/SGST Acts.

Summary of Facts and Dispute:
  1. Impugned Action: The petitioner was denied the benefit of input tax credit for the financial year 2019-20 through an order dated 10.06.2024, citing sub-section (4) of Section 16 of the CGST/SGST Acts.
  2. Petitioner's Argument: The petitioner argued that, with the notification of sub-section (5) of Section 16 of the CGST/SGST Acts, they are now entitled to the previously denied input tax credit.
  3. Core Question of Law: Whether the petitioner is entitled to input tax credit, previously denied under Section 16(4), in light of the subsequent notification of Section 16(5) of the CGST/SGST Acts.
Key Legal Issues & Findings:
Applicability of Section 16(5) for Input Tax Credit

The Court considered the petitioner's submission regarding the recent statutory change.

  • Entitlement to ITC: The petitioner is entitled to the benefit of input tax credit, which was previously denied.
  • Reason for Entitlement: This entitlement arises due to the notification of sub-section (5) of Section 16 of the CGST/SGST Acts, which overrides the earlier denial based on sub-section (4) of Section 16.
Ruling:
  1. Outcome: Ext.P1 order dated 10.06.2024 is set aside to the extent that it denied input tax credit to the petitioner on account of the provisions of sub-section (4) of Section 16 of the CGST/SGST Acts.
  2. Directions: The competent authority is directed to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts, and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment.
  3. Liberty: The writ petition is disposed of with directions for a fresh consideration of the input tax credit entitlement based on the updated legal provisions.

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

Petitioner has approached this Court, being aggrieved by the fact that petitioner has been denied the benefit of input tax credit on account of the provisions contained in sub-section (4) of Section 16 of the CGST/SGST Acts, for the financial year 2019-20, through Ext.P1 order dated 10.06.2024.

2. Learned counsel appearing for the petitioner would submit that, with the notification of sub-section (5) of Section 16 of the CGST/SGST Acts, the petitioner would now be entitled to the benefit of input tax credit which has been denied to the petitioner through Ext.P1 order.

3. Heard the learned Government Pleader also.

4. Having heard the learned counsel appearing for the petitioner and the learned Government Pleader and having regard to the assertion of the learned counsel appearing for the petitioner that on account of notification of sub­section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner by Ext.P1 order, the writ petition will stand disposed of, setting aside Ext.P1 to the extent that it denied input tax credit to the petitioner on account of the provisions of sub-section (4) of Section 16 of the CGST/SGST Acts and directing the competent authority to pass fresh orders, after taking note of the provisions contained in Section 16(5) of the CGST/SGST Acts and after affording an opportunity of hearing to the petitioner, within a period of three months from the date of receipt of a certified copy of this judgment.