Tvl Karthikeya Authentic Andhra Restaurant Vs Assistant Commissioner (ST) (Madras High Court)
Summary: Madras High Court considered a writ petition challenging an order dated 30.08.2024 and the subsequent rejection of the petitioner’s rectification petition. The petitioner had discharged the entire tax demand on 19.10.2024, before the notified payment due date under the Section 128A GST amnesty scheme, and had referred to the scheme during the rectification proceedings.
It contended that these actions constituted substantial compliance and that the conditions prescribed under Rule 164 should be treated as directory rather than mandatory. The Court rejected this contention. It observed that the phrase “subject to such conditions as may be prescribed” in Section 128A(1) qualified the statutory relief and that the use of a comma did not make the prescribed conditions directory. Referring to its earlier decision in Incompressible Fluid Control System, the Court reiterated that the amnesty scheme was time-bound, its procedural timelines ran from or were closely connected with the filing of the waiver application, and timely filing was therefore an essential requirement.
Consequently, the condition prescribed in Rule 164(6) was held to be mandatory. Nevertheless, the Court noted that the original assessment order was passed ex parte and that the petitioner had fully discharged the tax demand, thereby protecting the Revenue’s interest. In the interest of justice, the original order was set aside and the matter was remanded to the Assistant Commissioner for reconsideration after providing a reasonable opportunity to the petitioner. A fresh order was directed to be issued within five months.
Cases Discussed
- Government of Kerala v. Mother Superior Adoration Convent, (2021) 126 taxmann.com 68 (SC)
- Commissioner of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1
- Sama Alana Abdulla v. State of Gujarat, (1996) 1 SCC 427
- Incompressible Fluid Control System v. The Assistant Commissioner, 2026: MHC: 3296
- Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and others, (2011) 1 SCC 236
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
An order dated 30.08.2024 and order rejecting the rectification petition are challenged in this writ petition.
2. Learned counsel for the petitioner submits that the petitioner discharged the tax demand under the impugned order on 19.10.2024, which is prior to the notified due date under Section 128A. She also submits that the petitioner had referred to the amnesty scheme in course of rectification proceedings. According to learned counsel, this tantamounts to substantial compliance with the requirements of Section 128A..
3. Relying on the judgment of the Supreme Court in Government of Kerala v. Mother Superior Adoration Convent, (2021) 126 taxmann.com 68 (SC), learned counsel submits that the Supreme Court noticed that the judgment in Commissioner of Customs, v. Dilip Kumar & Co., (2018) 9 SCC 1 did not take note of the line of authorities that had drawn a distinction between exemption provisions, in general, and exemption provisions which have a beneficial purpose. Adverting to the language of sub-section (1) of Section 128A, learned counsel submits that the conditions prescribed in Rule 164 are intended to be directory and not mandatory and that this is reflected in the fact that the phrase “subject to such conditions as may be prescribed” is separated from the rest of the sub-section by a comma. In support of this contention, the judgment of the Supreme Court in Sama Alana Abdulla v. State of Gujarat, (1996) 1 SCC 427, particularly paragraph 7 thereof is relied on.
4. Without prejudice to the above contentions, learned counsel submits that the petitioner be given another opportunity in view of the fact that the original order was issued ex parte and the entire tax demand was discharged.
5. Mr. I. Dinesh, learned Additional Government Pleader (Tax), accepts notice on behalf of the first respondent.
6. Section 128A(1) sets out the three circumstances in which an application for waiver may be filed. Thereafter, it is stipulated therein that if the full amount of tax payable as per clauses (a) to (c) are paid before the date notified, no interest under Section 50 or penalty under applicable GST statutes shall be payable and that proceedings shall be concluded subject to such conditions as may be prescribed. The phrase “subject to such conditions as may be prescribed” is intended to be qualificatory and, therefore, such phrase is separated by a comma. Merely on the basis that the qualificatory phrase is separated from the rest of the sub-section by a comma, it cannot be concluded that the prescribed conditions are directory and not mandatory. In order to decide whether the prescribed requirements are directory or mandatory, it became necessary to engage with the prescribed requirements. Such conditions are prescribed in Rule 164. In a batch of cases, Incompressible Fluid Control System v. The Assistant Commissioner, 2026: MHC: 3296, after examining Rule 164, I concluded that the amnesty scheme is time bound with provision for deemed approval and that the time limits either run from the date of filing of the application for waiver or are closely linked thereto. On that basis, I concluded that the time limit for lodging an amnesty application is an essential requirement. In that context, the judgment of the Supreme Court in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and others, (2011) 1 SCC 236, with regard to the distinction between essential and procedural requirements was relied on.
7. Considering the aforesaid, I am unable to accept the contention that the condition prescribed in Rule 164(6) is directory and not mandatory.
Nonetheless, it is noticeable that the tax demand under the ex parte original order was fully discharged. Considering this aspect, revenue interest stands protected and the interest of justice warrants another opportunity to the petitioner. Towards that end, the impugned original order is set aside and the matter is remanded to the first respondent for re-consideration. After providing a reasonable opportunity to the petitioner, a fresh order shall be issued within five months from the date of receipt of a copy of this order.
8. The writ petition is disposed of on the above terms. Consequently, connected miscellaneous petitions are closed. There shall be no order as to costs.
