Order Date – 22 November 2024

Parties: M/S ANAND STEEL and Others Vs Vs UNION OF INIDA THROUGH THE CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS AND OTHERS

Facts –

• The Petitioner, M/s Anand Steel, has duly filed GST returns for the months April 2018 to March, 2019 in FORM GSTR-3B along with the GST liability and late fee on outwards supplies and availed input tax rebate correctly as per their inward supplies for the relevant period in accordance with the provisions of Section 16 of the Act.
• A show cause notice in FORM GST DRC-01 was issued u/s 73 of the Act on 27.07.2023 proposing to disallow the ITC for the tax period 2018-19 on the ground of late filing of return in FORM GSTR-3B. The Assistant Commissioner passed order disallowing the ITC under Section 74 of the GST Act.

Issue –

• Whether ITC can be availed on late filing of return along with late fee?

Order –

• The Divisional Bench of Hon’ble High Court observed that the provision of Section 16(4) of the CGST Act which restricts the claim of ITC only on the ground that a return is filed after the date prescribed is arbitrary as well as the tax payer who is claiming the ITC has already made the payment of tax to the supplier from whom the foods and services has been received. The payments include both cost of service or goods and the amount of Tax, thus the taxpayer cannot be deprived from his right to claim ITC.
• Allowing a taxpayer to file returns with payment of late fees and then disallow him the ITC, because the return was filed belatedly, is punishing him twice for a single default so committed. Moreover, with the payment of late fee u/S 47 as well as payment of interest u/S 50, the treasury has been suitably compensated for the postponement of the tax. Payment of late fees and interest are already there as deterrent for the taxpayers forcing them to be disciplined. Under such circumstances, saddling with double payment of tax by way of Section 16(4) is arbitrary and capricious.
• Since, the Central Government by way of the Act of 2024 has proposed to amend Section 16 of the GST Act by introducing Section 118 of the Act of 2024, thereby jettisoning the condition of time limit, this Court is of the considered opinion that this batch of petitions deserves to be allowed without examining the constitutional validity of Section 16(4). Hence the writ petitions are allowed.