The Kerala High Court has clarified that taxpayers cannot be denied input tax credit solely due to a missed deadline for rectification, affirming the retrospective nature of statutory relief under Section 16(5) of the CGST Act.
The Kerala High Court has said a taxpayer cannot be denied input tax credit merely because it missed a deadline for filing a rectification application, ruling that the statutory relief available under Section 16(5) of the Central Goods and Services Tax Act should not be defeated by delay alone. Justice Ziyad Rahman A.A. allowed Wild Planet Pvt. Ltd.’s petition and set aside the order that had refused the company credit.
In its reasoning, the court treated the benefit under Section 16(5) as a retrospective statutory entitlement. According to the judgment, that means a taxpayer who otherwise meets the legal conditions should not lose the benefit simply because its rectification plea was filed after the time mentioned in a Central Board of Indirect Taxes and Customs circular. The court said the show-cause notice itself recorded that Wild Planet had filed the relevant returns on 25 December 2020 and 29 December 2020, which brought the company within the Section 16(5) window.
The dispute arose from proceedings under Section 73 of the GST law, which permits tax officials to assess unpaid or short-paid tax in cases not involving fraud or wilful misstatement. The department had rejected Wild Planet’s claim on the ground that its returns were filed beyond the deadline under Section 16(4). It then argued that the company could not rely on the newer relief because the cut-off date for filing a rectification application had passed.
The Kerala High Court did not accept that view. It held that the expiry of the rectification deadline could not extinguish a substantive right created by Section 16(5). The assessing authority has now been asked to reconsider the matter and extend the input tax credit benefit, provided Wild Planet satisfies the other statutory requirements. The decision follows a series of similar rulings from the same court in which taxpayers challenged ITC denials made without giving full effect to the later insertion of Section 16(5).
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