ITC Within Section 16(5) Not Barred by Section 16(4)

Centax Editorial Board

April 9, 2026April 11, 2026

• 2 min. read

Case Details: Thirupathi Powerloom Weavers Coop and Society Ltd. vs. Superintendent of GST and Central Excise, Erode (2026) 40 Centax 361 (Mad.)

Judiciary and Counsel Details

Krishnan Ramasamy, J.
Shri K.A. Parthasarathy, for the Petitioner.
Shri Rajendran Raghavan, Senior Standing Counsel, for the Respondent.

Facts of the Case

The petitioner, a registered dealer, challenged the reversal of ITC on the ground of limitation under section 16(4) of the CGST Act. The department had issued orders denying the ITC and raising consequential demands of tax, interest and penalty solely on the basis that the claim was time-barred. The petitioner contended that the availment of ITC was within the extended period permitted under section 16(5) and, therefore, could not be denied by invoking section 16(4). A writ petition was accordingly filed assailing the impugned orders and the limitation-based denial of ITC. The matter was accordingly placed before the High Court.

High Court Held

The High Court held that ITC availed within the period contemplated under section 16(5) could not be denied by invoking the limitation prescribed under section 16(4). It was observed that the impugned orders, to the extent they treated such credit as time-barred, were unsustainable in law. The Court accordingly quashed the impugned orders insofar as they denied ITC on limitation grounds and restrained the department from initiating proceedings on that basis. It was, however, clarified that such relief would apply only where the ITC fell within the permissible period under section 16(5). Liberty was granted to the department to examine issues relating to discrepancies, excess claims or fake ITC in accordance with law.