2026-VIL-166-GSTAT-GZB
  1. Home
  2. 2026-VIL-166-GSTAT-GZB

SGST Tribunal

GST - Introduction of grounds under Section 16(2)(b) and 16(2)(c) at the appellate stage to sustain a demand originally founded on Section 16(4) of the CGST Act, 2017 - Appellant availed input tax credit pertaining to an earlier financial year through GSTR-3B returns filed in the subsequent year, and the credit was reflected in GSTR-2A. The SCN under Section 73 and the Order-in-Original disallowed the credit solely as time barred under Section 16(4). The First Appellate Authority upheld the demand and additionally held that credit was availed without receipt of supplies and without payment of tax by suppliers - Whether grounds under Section 16(2)(b) or 16(2)(c), not forming the original foundation of the demand, can subsequently be introduced to sustain it - HELD - The show cause notice did not allege non-receipt of goods or services, non-payment of tax by suppliers or breach of Section 16(2)(b) or 16(2)(c). The Order-in-Original contained no independent finding on these grounds. Section 75(7) provides that no demand shall be confirmed on grounds other than those specified in the notice - Once Section 16(5) removes the foundation under Section 16(4), the demand cannot be sustained by constructing a new case under Section 16(2)(b) or 16(2)(c). Input tax credit is a statutory entitlement subject to the conditions imposed by the legislature. The Revenue cannot rely on this principle to enforce a time limit that has been retrospectively displaced. Section 16(5) does not cure substantive ineligibility. Allegations of fake invoices, non-receipt of supplies, blocked credit or any other substantive defect may be raised, proved and adjudicated in accordance with law - Grounds under Section 16(2)(b) or 16(2)(c), not forming the original foundation of the demand, cannot be introduced subsequently to sustain it – The appeal is allowed - Whether GSTR-3B is a return under Section 39 for the purpose of Section 16(5) - Appellant took input tax credit through GSTR-3B returns for a period within the financial year following the year to which the invoices pertained. The Revenue contended that the credit was not taken in a return under Section 39 as it was claimed through GSTR-3B - Whether GSTR-3B constitutes a return under Section 39 for the purposes of Section 16(5) - HELD - The Supreme Court in Bharti Airtel has held that GSTR-3B, although introduced as a stopgap arrangement, is a return within the meaning of Section 39 read with Rule 61. Since the credit was taken by the Appellant in GSTR-3B returns, it satisfies the expression any return under Section 39 in Section 16(5). The contention of the Revenue is not legally sustainable - GSTR-3B is a return under Section 39 for the purposes of Section 16(5) - Distinction between availment and utilisation of input tax credit under Section 16(5) - Appellant took input tax credit through returns filed within the period permitted by Section 16(5). The dispute required the Tribunal to distinguish availment of credit from its utilisation and from its annual disclosure and reconciliation - Whether there is any legal distinction between availment of input tax credit and its utilisation - HELD - Section 16 is concerned with entitlement to take credit. Once eligible credit is claimed through the prescribed return, it is credited to the Electronic Credit Ledger under Section 49, which is availment. Utilisation occurs later when the ledger is debited towards payment of output tax. Reconciliation is the subsequent reporting of credit in the annual return and reconciliation statement. These are distinct events and are not interchangeable - Section 16(4) regulates the time for taking credit and Section 16(5) retrospectively extends that period for specified financial years. Neither provision requires credit validly taken within the permitted period to be utilised within that same period. Once the disputed credit was taken within the period permitted by Section 16(5), its subsequent utilisation cannot be treated as delayed availment - Section 16(5) imposes no separate expiry date for utilisation of credit validly availed - Effect of non-carry-forward or incorrect disclosure in GSTR-9 and GSTR-9C on input tax credit already taken through a return under Section 39 - The First Appellate Authority held that Section 16(5) did not alter the requirement to disclose the carry-forward of credit in the specified tables of GSTR-9 and GSTR-9C. The Revenue contended that Section 16(5) permits credit to be taken in GSTR-3B but does not validate an incorrect declaration in the annual return or reconciliation statement - Whether non-carry-forward or an incorrect disclosure in GSTR-9 or GSTR-9C can defeat credit already taken through a return under Section 39 - HELD - GSTR-9 is an annual return and GSTR-9C is a reconciliation statement. Neither is the return under Section 39 through which the disputed credit was taken. Section 16(5) does not make entitlement conditional upon correct disclosure in a particular column of GSTR-9 or GSTR-9C. The statutory condition is that the credit must have been taken through a return under Section 39 filed by the specified date - A subsequent error in annual reconciliation cannot convert credit already availed into credit not availed. An annual return or reconciliation statement may disclose a discrepancy and prompt verification. It does not create, extinguish or recharacterise credit already taken through GSTR-3B. A contrary interpretation would indirectly restore the restriction that Parliament removed through Section 16(5) - Incorrect disclosure in GSTR-9 or GSTR-9C cannot defeat credit already taken through a return under Section 39 - Effect of non-applicability of Notification No. 22/2024-Central Tax on the entitlement under Section 16(5) - The Revenue argued that the notification relied upon by the Appellant did not apply. The notification provides a special procedure for rectification of orders where credit was denied under Section 16(4) but later became available under Section 16(5) or Section 16(6), where no appeal has been filed - Whether the alleged non-applicability of Notification No. 22/2024-Central Tax defeats the substantive entitlement created by Section 16(5) - HELD - The submission proceeds on a misconception about the source of the entitlement. The notification does not create entitlement to credit. The entitlement flows directly from Section 16(5), which was introduced retrospectively. The notification provides an additional procedural remedy for a specified category of orders where no appeal has been filed. The Appellant may not be able to use that special rectification procedure as an appeal was already filed. That does not make Section 16(5) inapplicable. The Revenue conflates the procedural remedy with the substantive statutory entitlement. Circular No. 237/31/2024-GST directs authorities to give effect to Sections 16(5) and 16(6) in pending proceedings and appeals - The non-applicability of the special rectification procedure does not defeat the right accrued under Section 16(5) - Protection of input tax credit pertaining to FY 2018-19 taken through GSTR-3B during October 2019 to March 2020 under retrospective Section 16(5) - Appellant took input tax credit pertaining to FY 2018-19 through GSTR-3B returns for the period October 2019 to March 2020. The demand under Section 73 was based solely on the premise that the credit was wrongly availed as it was taken after the time limit in Section 16(4) - Whether the disputed credit is protected by retrospective Section 16(5) - HELD - The credit was taken through GSTR-3B returns filed well before 30.11.2021. The case falls within the language of Section 16(5) - Where the return claiming credit was filed before 30.11.2021, denial under Section 16(4) cannot survive after the insertion of Section 16(5). The demand under Section 73 was founded on the premise that the credit was taken after the time limit in Section 16(4). Section 16(5) permits credit pertai
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GST & Customs updates: Sep'26
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?