The Jharkhand High Court addressed the case of M/s. Emotions Transmission Pvt. Ltd. versus the Union of India, where the petitioner challenged the denial of Input Tax Credit (ITC) amounting to ₹8,48,496 for the fiscal year 2018-19. This denial was based on the delayed filing of GSTR-3B returns, which was beyond the time limit set by Section 16(4) of the CGST Act. The department had also initiated recovery proceedings to collect dues from the petitioner’s bank account.
The petitioner argued that the retrospective introduction of Section 16(5) under the Finance (No. 2) Act, 2024, allowed taxpayers to claim ITC for fiscal years 2017-18 to 2020-21 if returns were filed by November 30, 2021. Thus, the ITC denial was challenged as unsustainable, and the petitioner sought a refund and the quashing of recovery actions.
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The Court noted that the amendment significantly altered the legal context, justifying judicial intervention despite the usual preference for alternate statutory remedies. It highlighted that Section 16(5) permitted the availment of ITC for the specified fiscal years, taking into account the CBIC Circular dated October 15, 2024, which clarified the implementation of these provisions.
Following precedents from similar cases, the Court quashed the original order and the garnishee proceedings, remanding the matter for reassessment considering the amended law. The Court left all issues, including refund eligibility, open for further consideration by the Assessing Authority.
Order Date - 06 May 2026
Parties: M/s. Emotions Transmission Pvt. Ltd. vs Union of India & Others
Facts -
- M/s. Emotions Transmission Pvt. Ltd. challenged the Order-in-Original dated 26.07.2023 whereby ITC of ₹8,48,496 for FY 2018-19 was denied on the ground that GSTR-3B returns were filed beyond the time limit prescribed under Section 16(4) of the CGST Act.
- The department also demanded interest and penalty and subsequently issued garnishee proceedings through Form GST DRC-13 directing the petitioner’s bank to recover dues from the petitioner’s account.
- The petitioner argued that after insertion of Section 16(5) through the Finance (No. 2) Act, 2024, taxpayers became eligible to claim ITC for FY 2017-18 to 2020-21 if returns were filed up to 30.11.2021, and therefore the ITC denial was no longer sustainable.
- The petitioner further sought refund of reversed ITC and quashing of consequential recovery proceedings initiated by the GST authorities.
Issue -
- Whether denial of ITC for delayed filing of GSTR-3B could survive after retrospective insertion of Section 16(5) of the CGST Act?
Order -
- The Court observed that although ordinarily the petitioner should have been relegated to the alternate statutory remedy, the subsequent amendment introducing Section 16(5) materially changed the legal position and therefore required judicial interference.
- The Court noted that Section 16(5) specifically allowed availment of ITC for FY 2017-18 to 2020-21 where returns were filed up to 30.11.2021. The Court also took note of CBIC Circular dated 15.10.2024 clarifying implementation of the amended provisions.
- The Court relied upon earlier coordinate bench decisions in Vinod Udaipuri and Manoj Kumar Singh where similar matters were remanded after considering the impact of subsequent statutory developments affecting ITC eligibility.
- The Court quashed both the Order-in-Original and consequential garnishee proceedings, remanding the matter to the Assessing Authority for fresh adjudication after considering the amended Section 16(5) and related clarifications. All issues, including refund entitlement, were left open for reconsideration.
