The Madras High Court has ruled in favor of M/s Selva Vilas Jewellery, quashing an assessment order that denied Input Tax Credit (ITC) for the financial years 2017–18 to 2020–21. The denial was based on the ground of delay under Section 16(4) of the TNGST Act. The petitioner argued that this denial was illegal, as it ignored the retrospective insertion of Section 16(5) by the Finance (No.2) Act, 2024, which should override Section 16(4).

The court addressed the issue of whether ITC availed for these financial years could be denied as time-barred despite the retrospective effect of Section 16(5). It concluded that Section 16(5) indeed overrides the time limitations set by Section 16(4) and applies retrospectively. As such, ITC claimed on or before November 30, 2021, cannot be denied on the grounds of being time-barred.

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Consequently, the court quashed the assessment order to the extent that it denied ITC based on limitation. It also restrained the department from taking any recovery action on this issue. However, the authorities were given the liberty to address other potential issues, such as fake ITC claims or discrepancies, separately. This ruling ensures that taxpayers who claimed ITC within the specified period are protected from denial due to retrospective legislative changes.