GST ITC Denied for Late Filing of GSTR-3B Calcutta HC Orders Reconsideration in Light of Section 16(5)
Input Tax Credit (ITC) is the backbone of the GST regime. But what happens if a taxpayer files GSTR-3B after the due date? Can ITC still be claimed? A recent Calcutta High Court judgment brings clarity to this concern, especially around Section 16(5) of the CGST Act, 2017.
Let’s break this down in simple terms.
What Was the Case?
In M/s Modern Traders vs Assistant Commissioner, State Tax (WPA 28608 of 2023), the petitioner filed GSTR-3B for August 2017 belatedly. Consequently, the GST department denied ITC and issued a demand notice under Section 73.
The taxpayer challenged this move, claiming they had valid ITC under Section 16(1) and the delay did not warrant outright denial.
Court’s Key Observations
The Calcutta High Court made the following important points:
- Section 16(5) allows the government to prescribe time limits for availing ITC, but this must be balanced with principles of natural justice.
- The denial of ITC without granting an opportunity to explain the delay or establish eligibility violates due process.
- The department must reassess the ITC claim based on merits — not reject it solely due to delayed filing.
📜 Legal Reference:
Section 16(4) bars ITC beyond a prescribed date (30th Nov of the following FY). But Section 16(5) focuses on actual possession of invoice and payment to supplier — both of which were fulfilled by the petitioner.
Practical Takeaways for Taxpayers
- Late GSTR-3B filing may not always mean ITC is lost, especially if invoice conditions and payment are satisfied.
- If ITC is denied, cite this judgment and request reconsideration under Section 16(5).
- Maintain proof of tax invoice, supplier payment, and return filing to defend your position.
Expert View: What Tax Practitioners Should Do
“This ruling reinforces that technical lapses shouldn’t override substantial compliance. Taxpayers must be cautious, but the department must also act fairly.”
— CA R. Krishnamurthy, GST Advisor at Efiletax
Comparison Table: ITC Eligibility Conditions
| Condition | Required? | Relevant Section |
|---|---|---|
| Possession of tax invoice | ✅ Yes | Section 16(2)(a) |
| Receipt of goods/services | ✅ Yes | Section 16(2)(b) |
| Tax paid by supplier to Govt | ✅ Yes | Section 16(2)(c) |
| GSTR-3B filing within due date | ✅ Ideally | Section 16(4) |
| Payment to supplier within 180 days | ✅ Yes | Rule 37 |
| Delayed GSTR-3B eligible for review | ⚠️ Maybe | Calcutta HC – WPA 28608/2023 |
Related Compliance Tip
If you’re facing ITC denial due to technical defaults, explore remedy under Section 161 (rectification) or file a reply under Rule 142 during adjudication.
Summary
The Calcutta High Court ruled that Input Tax Credit (ITC) can’t be denied solely for delayed GSTR-3B filing. Under Section 16(5), if invoices are valid and payment made, ITC eligibility must be reconsidered. A crucial relief for businesses facing ITC denial.
FAQs
Q1. Can I claim ITC if I file GSTR-3B late?
Yes, if you meet the invoice and payment conditions under Section 16, you may request reconsideration — citing the Calcutta HC ruling.
Q2. What if my ITC is rejected already?
File an appeal or reply to the show cause notice, quoting the High Court judgment and Section 16(5).
Q3. Does this judgment apply to all states?
While it’s from Calcutta HC, it holds persuasive value and can be referenced in similar disputes across India.