Assessment order without considering the Supreme court pronouncement, liable to set aside: Calcutta High Court
Summary: The Calcutta High Court in Sunrise Timply Company Pvt. Ltd. vs. Union of India & Ors held that a judgment of a Constitutional Court declaring the correct position of law applies retrospectively unless it is expressly stated to operate prospectively, while statutes ordinarily apply prospectively unless made retrospective. In this case, proceedings were initiated under Section 74 of the CGST Act alleging non-payment of IGST on ocean freight under reverse charge. Despite the taxpayer relying on binding judicial precedent that invalidated such levy, the adjudicating authority confirmed the demand and later rejected a rectification application on the ground that the Supreme Court judgment did not specify its retrospective effect. The High Court found this approach legally unsustainable, observing that the proper officer wrongly ignored settled constitutional principles governing the effect of judicial declarations. Once the Supreme Court affirmed the relevant legal position, it applied retrospectively to pending matters. Consequently, the Court set aside both the original demand order and the order rejecting rectification, reaffirming that departmental authorities cannot deny relief by misapplying the law on retrospectivity of judicial decisions.
Fact of the case:-
A proceeding under Section 74 of the said Act of 2017 had been initiated against the petitioner by issuing a notice to show cause alleging that the petitioner had failed to make of IGST on ocean freight under RCM, same was duly replied by the petitioner.
