ITC denied for late GST returns of 2017-18 to 2020-21? Three High Courts apply section 16(5)
Section 16(5) of the CGST Act, inserted retrospectively from 1 July 2017, allows input tax credit for invoices of FY 2017-18 to 2020-21 in any GSTR-3B filed up to 30 November 2021. In September and October 2026 the Karnataka, Kerala and Madras High Courts set aside orders that had denied such credit under section 16(4) only because the returns were late.
What this means
A late return filed on or before 30 November 2021 no longer defeats the credit for those four years. CBIC has told officers to apply section 16(5) at every stage (before notice, at adjudication, in appeal and in revision). Where an order has already confirmed a demand on that ground alone, these courts have set it aside.
Who is affected
GST-registered persons whose input tax credit for FY 2017-18, 2018-19, 2019-20 or 2020-21 was denied, or is being questioned, under section 16(4) because the return claiming it was filed late, where that return was filed on or before 30 November 2021.
What you should do
If an order or notice denies ITC for FY 2017-18 to 2020-21 on the ground of late filing, check the date on which each GSTR-3B was actually filed. If it is on or before 30 November 2021, raise section 16(5) and CBIC Circular 237/31/2024-GST in your reply or appeal. Note that tax already paid or credit already reversed is not refunded because of this amendment.
What changed
Section 16(4) of the CGST Act bars input tax credit taken after 30 November following the financial year (or the annual return, if earlier). Section 118 of the Finance (No. 2) Act, 2024 inserted section 16(5) with effect from 1 July 2017: for invoices and debit notes of FY 2017-18, 2018-19, 2019-20 and 2020-21, credit can be taken in any return under section 39 filed up to 30 November 2021.
CBIC Circular No. 237/31/2024-GST (15 October 2024) tells officers to take cognisance of section 16(5) at whatever stage a case is: before a demand notice, at adjudication under section 73 or 74, in appeal under section 107 and in revision under section 108. For orders already passed with no appeal filed, it pointed to a special rectification procedure under Notification No. 22/2024-Central Tax, to be applied for within six months of 8 October 2024.
Section 150 of the same Act adds a limit: tax already paid, or credit already reversed, is not refunded because of the retrospective change.
In Shivneel Gas Sales (Karnataka High Court, 30 September 2026), returns for July 2017 to March 2018 had been filed between April and August 2019. The Court quashed the section 73 order and sent the matter back for a fresh order in the light of the petitioner's entitlement under section 16(5).
In Maya Vinod (Kerala High Court, 1 October 2026), returns for February and March 2019 filed in November 2019 were within the section 16(5) cut-off; the order denying credit was quashed with a direction to grant the credit if the petitioner is otherwise entitled. In Ramasamy Nagarajan (Madras High Court, 28 September 2026), returns for February and March 2020 filed on 3 November 2020 were within the cut-off, and the original order denying credit was set aside.
Each order turns on the actual filing dates. Section 16(5) removes only the time bar; the other conditions for credit still apply, as the Kerala order notes in granting the credit "if the petitioner is otherwise entitled".
Source & verification
Section 16(5) of the CGST Act (inserted by s.118 of the Finance (No. 2) Act, 2024, w.e.f. 01.07.2017; brought into force by Notification 17/2024-Central Tax, 27.09.2024); CBIC Circular No. 237/31/2024-GST dated 15.10.2024; Shivneel Gas Sales v. ACCT (Audit), Karnataka HC, WP 13471/2026, 30.09.2026; Maya Vinod v. Asst. State Tax Officer, Kerala HC, WP(C) 33728/2026, 01.10.2026; Ramasamy Nagarajan v. Addl. Commissioner of GST Appeals-II, Madras HC, WP 37312/2026, 28.09.2026
Read the official sourceRead and verified on 30 October 2026. We publish on the authority’s own instrument, never on a report of it.