M/S A2Z Infra Engineering LTD vs. Union Of INDIA And Ors.

Facts

The petitioner, M/s A2Z Infra Engineering Ltd., challenged adjudication and appellate orders for the financial year 2019-20 under the CGST/WBGST Act, 2017. The core issue revolved around the denial of Input Tax Credit (ITC) despite the insertion of Section 16(5) of the CGST Act, which retrospectively regularized ITC for financial years 2017-18 to 2020-21 if returns were filed by November 30, 2021. The petitioner argued that they filed their GSTR-3B returns for July 2018 to March 2020 prior to this cut-off date. A demand of Rs. 3,60,04,668/- was imposed for the financial year 2019-20. During the pendency of the writ petition, the petitioner's Electronic Credit Ledger was blocked, and an amount of Rs. 1,92,03,770/- was debited without prior intimation.

Held

The Court held that the petitioner had made out a prima facie case and interference was warranted. It found that by virtue of the inserted clause in Section 16, the petitioner could not be denied the benefit of the amendment, which was curative and retrospective from July 1, 2017. The ratio in Hiranmoy Dutta (supra) was found to be squarely applicable, confirming that once returns are filed by November 30, 2021, ITC for July 2018 to March 2020 is regularized. Consequently, the adjudication order dated August 27, 2024, the rectification order dated January 6, 2025, and the appellate orders dated February 6, 2025, and April 7, 2025, were quashed and set aside. The Court directed that the order dated August 27, 2024, be re-adjudicated, including the issue of blocking the Electronic Credit Ledger, in light of Section 16(5). The respondent authorities were restrained from taking coercive steps until re-adjudication, which was to be completed by November 30, 2026, after affording a personal hearing and passing a reasoned order.

Key Issues

1. Whether the petitioner is entitled to the benefit of the amendment introduced by Section 16(5) of the CGST Act, which allows Input Tax Credit (ITC) for financial years 2017-18 to 2020-21 if returns are filed by November 30, 2021, thereby regularizing ITC for the period July 2018 to March 2020. Petitioner's arguments: The petitioner contended that they filed their GSTR-3B returns for July 2018 to March 2020 prior to the November 30, 2021 deadline stipulated in Section 16(5). Therefore, they cannot be denied the benefit of this amendment, and the denial of ITC is illegal. They relied on the judgment in Hiranmoy Dutta vs. State of West Bengal, which held that ITC cannot be denied if returns are filed within the extended period provided by Section 16(5). Revenue/State's arguments: The respondent authorities argued that the petitioner's case does not squarely fall within the inserted clause, as the order in original dated August 27, 2024, had already attained finality. They contended that Section 16(5) cannot be invoked to reopen a concluded assessment and that the petitioner failed to demonstrate compliance with the condition of filing returns by November 30, 2021.