GST Credit Denied? Section 16(5) Can Save Your Claim

Courts have ruled that GST input tax credit (ITC) denied due to late filing can be reconsidered under Section 16(5) of the CGST Act. If your ITC was rejected for older periods, you may have grounds to appeal and recover it.

Here's what happened: The Kerala High Court quashed a GST department order that denied Input Tax Credit for the January–March 2019 quarter solely on procedural/timing grounds.. The court directed the tax authority to reconsider the ITC claim under Section 16(5) of the CGST Act, which provides relief for delayed ITC claims covering July 2017 to March 2021.. Section 16(5) was inserted into the CGST Act specifically to protect genuine taxpayers whose ITC claims were blocked due to filing mismatches or late returns, not due to fraud or fake invoices..

What you should do: Check all GST demand notices or ITC reversal orders from FY 2018-19 to FY 2020-21 — these periods fall within Section 16(5)'s relief window and may be contestable.. Ask your CA or GST consultant to file a fresh written representation to your GST officer citing Section 16(5) and recent High Court directions if your ITC was denied on timing grounds.. Maintain proof of actual payment to your supplier (bank transfer records, e-way bills, invoices) — courts weigh genuine transactions heavily when reconsidering denied ITC claims..

Section 16(5) relief applies even if your original ITC claim was never filed — as long as the underlying supply was real and falls within the covered tax periods (July 2017 – March 2021).