Missing the Rectification Deadline Doesn't Kill Your Section 16(5) Input Tax Credit: Kerala High Court

Kerala High Court holds that a taxpayer who missed CBIC's six-month rectification window can still get input tax credit restored by Section 16(5), because the sub-section confers a statutory benefit granted retrospectively by Parliament.

Thousands of businesses had input tax credit denied for 2017-18 to 2020-21 simply because the GSTR-3B claiming it was filed after the Section 16(4) deadline. The Finance (No. 2) Act, 2024 corrected that retrospectively by inserting Section 16(5), which allows the credit provided the return was filed up to 30 November 2021.

For taxpayers already carrying an order, CBIC notified a special rectification procedure under Notification No. 22/2024-Central Tax dated 8 October 2024, explained in Circular No. 237/31/2024-GST. The application had to be made within six months of that notification, and only where no appeal had been filed.

The Kerala High Court has now held that missing that window does not destroy the entitlement. In M/s Wild Planet Pvt. Ltd. v. The Superintendent, WP(C) No. 7801 of 2026, Justice Ziyad Rahman A.A. dealt with returns for January to March 2020 filed on 25 and 29 December 2020, comfortably inside the Section 16(5) date. The department had denied the credit and then argued the rectification application was late. The Court held that merely because the petitioner did not apply within the time specified, the claim need not be rejected, since Section 16(5) is a statutory benefit conferred retrospectively. The order was set aside and the credit directed to be granted if the other conditions are satisfied.

What this means for you: if your credit was refused only on Section 16(4) and you let the rectification window pass, the door may not be closed. Read the circular here: https://gstcouncil.gov.in/sites/default/files/2024-10/circular-no-237-2024.pdf

Topics:section 16(5)input tax creditrectificationKerala High CourtCGST ActCircular 237/31/2024Notification 22/2024section 16(4)ITC denialChennai GSTTamil NaduGSTR-3B

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