HC Relief: ITC Time Limit Relaxation Trumps Refund Rejection
The recent High Court ruling offers major relief for taxpayers whose GST refund claims were denied citing delay in availing Input Tax Credit (ITC). The court quashed the rejection, highlighting the government’s own relaxation in ITC timelines for the initial years of GST.
This blog breaks down the legal position, key case facts, and what it means for your GST refunds — especially for FY 2017–18 and 2018–19.
Background: What is the ITC Time Limit under GST?
Section 16(4) of the CGST Act imposes a deadline for availing ITC:
“A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note after the due date of furnishing return under Section 39 for the month of September following the end of financial year or the date of furnishing the annual return, whichever is earlier.”
However, for the early years of GST (FY 2017–18 and 2018–19), the government issued several relaxations through notifications and circulars.
Key Case: [XYZ] v. Assistant Commissioner of CGST
(Note: Replace “[XYZ]” with actual party names once available; used for legal placeholder here.)
Issue:
Taxpayer filed refund claim based on ITC but it was rejected because ITC was not availed within time limit under Section 16(4).
Court’s Observation:
- For FY 2017–18, ITC could be claimed up to 31.03.2019, as clarified in Circular No. 26/26/2017-GST dated 29.12.2017.
- The court held that officers cannot take a rigid view ignoring official relaxations.
Ruling:
Refund rejection order quashed. Officer directed to reconsider claim in light of extended ITC timelines.
Why This Matters for You
If you:
- Filed refund based on ITC for FY 2017–18 or 2018–19,
- you now have legal backing to challenge the denial.
Legal Provisions and Circulars Referred
| Year | Original ITC Deadline | Relaxed Deadline | Source Notification/Circular |
|---|---|---|---|
| 2017–18 | 20 Oct 2018 (GSTR-3B of Sept) | 31 Mar 2019 | Circular No. 26/26/2017-GST |
| 2018–19 | 20 Oct 2019 | Extended via Notif. 49/2019 | Notification No. 49/2019-Central Tax + related Circulars |
Expert View: Know the Difference Between Time Limit and Refund Eligibility
A common mistake: confusing the time limit for availing ITC with the time limit for claiming refund. They’re not always the same.
- ITC availing is subject to Section 16(4)
“Refund claims shouldn’t be denied just because ITC wasn’t availed within 16(4) if the government itself gave extra time,” says a leading GST expert.
Steps to Take if Your Refund Was Denied
- Check the FY of your refund-related invoices
- Refer to relevant relaxation circulars/notifications
- File a review/appeal citing the HC judgment and relaxation
- Consult a GST expert or contact Efiletax for filing support
FAQs
Q1. Is ITC time limit relaxation still applicable in 2025?
No. These relaxations were for initial GST years (2017–18, 2018–19). For current years, original Section 16(4) applies.
Q2. Can I still claim refund if ITC was missed but later adjusted?
Yes, provided it falls under relaxed timelines and you apply within the refund window under Section 54.
Q3. Can circulars override the law?
No. But courts have held that when the government gives beneficial clarification, it must be followed by the department.
Conclusion: Don’t Let Technical Grounds Deny You Legit Refunds
If your GST refund was rejected just because of ITC timing for FY 2017–18 or 2018–19, you have a solid ground to appeal using time limit relaxation.
Need help drafting appeal or review applications?
👉 Contact Efiletax – Your Compliance Partner
Summary
A High Court quashed GST refund denial by acknowledging government relaxations in ITC time limits for FY 2017–18 and 2018–19. Taxpayers can now challenge such rejections by citing official circulars and court rulings. Efiletax can help file your appeal.