Decided 29 September 2026. The Ghaziabad Bench of GSTAT has set aside a demand of IGST Rs 20,94,605 with interest and penalty, holding that ITC for FY 2018-19 claimed in GSTR-3B returns for October 2019 to March 2020 is protected by section 16(5), inserted retrospectively from 01.07.2017. The appellate authority could not sustain the demand on new grounds under section 16(2)(b) and (c) that were not in the notice.
Case at a glance
| Case | M/s Three Aces Global Logistics Pvt. Ltd. v. Joint Commissioner (IT), State Tax, Lucknow & Ors. |
| Forum | GSTAT, Ghaziabad State Bench, Division Bench Court I |
| Appeal No. | APL/6/GZB/2026 |
| Date of order | 29 September 2026 |
| Demand set aside | IGST Rs 20,94,605 with interest, and penalty of Rs 2,09,461 |
| Result | Appeal allowed with consequential relief |
Facts of the case
The appellant, a freight forwarder and customs broker, had ITC of Rs 34,21,676 relating to FY 2018-19, all reflected in GSTR-2A. Of this, Rs 13,27,071 was taken before 30.09.2019 and Rs 20,94,605 between October 2019 and March 2020 because supplier invoices arrived late.
The section 73 order allowed the first part but denied Rs 20,94,605 as time-barred under section 16(4). The first appellate authority upheld it and added findings on GSTR-9/9C carry-forward, Circular 183 certificates, and non-receipt and non-payment under section 16(2)(b) and (c).
Issue before the Tribunal
Is ITC for FY 2018-19 taken in GSTR-3B before 30.11.2021 saved by section 16(5), and can the demand be sustained on new grounds?
What the Tribunal held
- Section 16(5), inserted by the Finance (No. 2) Act, 2024 from 01.07.2017, allows ITC for FY 2017-18 to 2020-21 in any section 39 return filed up to 30.11.2021. GSTR-3B is a return under section 39 (UOI v. Bharti Airtel).
- The notice and order rested only on section 16(4). Under section 75(7) and SACI Allied Products, the demand cannot be sustained on new grounds under section 16(2)(b) or (c) raised for the first time in appeal.
- Availment, utilisation and annual reporting are distinct. Errors in GSTR-9 or GSTR-9C cannot extinguish ITC already taken through GSTR-3B.
- Notification 22/2024 provides a rectification route only where no appeal is filed; it does not limit the substantive right under section 16(5). Circulars 237/31/2024 and 238/32/2024 direct effect in pending appeals.
- The tax, interest and penalty were set aside, with consequential relief including the pre-deposit.
Practical takeaways for taxpayers
- If ITC for 2017-18 to 2020-21 was denied only under section 16(4) and the return was filed by 30.11.2021, rely on section 16(5) at any appellate stage.
- Object if an appellate authority adds grounds not in the show cause notice.
- Correct GSTR-9/9C errors where possible, but remember they do not by themselves defeat ITC taken in GSTR-3B.
Frequently asked questions
Does section 16(5) apply to pending appeals?
Yes. GSTAT Ghaziabad applied it, noting Circular 237/31/2024 directs authorities to give effect to it in pending proceedings.
Can the department rely on GSTR-9 errors to deny ITC?
Not by themselves. The Tribunal held annual return errors cannot extinguish ITC already taken through GSTR-3B.
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This summary is based on the order of the GST Appellate Tribunal, Ghaziabad State Bench (Division Bench Court I) in Appeal No. APL/6/GZB/2026. It is general information, not legal advice; the outcome of any case depends on its own facts and the full text of the order.