Case Law Details
SPK and Co. Vs State Tax Officer (Madras High Court)
Summary: The Hon’ble Madras High Court (Madurai Bench) in SPK and Co. v. State Tax Officer [W.P. (MD) No. 27787 of 2024, dated November 22, 2024], ruled that the limitation period for filing an appeal against an assessment order under GST begins from the date of the rectification order, not the original assessment order. The petitioner, M/s SPK and Co., challenged the rectification order on grounds of vague show-cause notices (SCNs) and apprehended that the appellate authority might calculate the limitation period from the date of the original order, rendering the appeal time-barred. The Court acknowledged the petitioner’s concerns and clarified that, under Section 161 of the GST Act, rectification orders either merge with the original assessment order or reset the limitation clock if rectification is rejected. In this case, since the original assessment order was passed on August 7, 2024, and the rectification order on November 12, 2024, the limitation period would start from the latter date. The Court dismissed the writ petition with the direction that the appellate authority calculate the limitation accordingly. This ruling aligns with the precedent set in TVL. SKL Exports v. State Tax Officer (2024), where the Court held that the limitation period for appeals should be calculated from the date of order rejection for refund applications. This judgment reinforces the principle of fair opportunity under the “Audi Alteram Partem” rule, ensuring taxpayers are not disadvantaged due to procedural ambiguity.
Introduction: The Hon’ble Madras High Court (Madurai Bench) in the case of M/s. SPK and Co v. State Tax Officer [W.P. (MD) No. 27787 of 2024 dated November 22, 2024] disposed the writ petition thereby holding that the date of limitation for filing of appeal would start from the date of passing of rectification order.
Facts:
M/s. SPK and Co. (“the Petitioner”) filed a writ petition challenging the order of assessment and rectification passed by the Revenue Department (“the Respondent”) on account of issuance of vague SCN.
However, the Hon’ble High Court during the proceeding stated that it would be more appropriate for the Petitioner to approach appellate authority.
However, the Petitioner stated that the appellate authority would press upon calculating the period of limitation from the date when the original assessment order was passed and, in such case, the appeal would be beyond the period of limitation and thus, there is an apprehension that the appeal would not be entertained due to limitation issue.
Further, it was contended that since the rectification application filed was rejected, the period of limitation would only start from the date of which rectification order has been passed.
Issue:
Whether the limitation period would start from the date of passing of rectification order?
Held:
The Hon’ble Madras High Court (Madurai Bench) in the case of W.P. (MD) No. 27787 of 2024 accepted the submissions made by the Petitioner and held that the date of limitation for filing of appeal for challenging the assessment order would start from the date of passing of rectification order.
Our Comments:
Also, the Hon’ble Madras High Court in the case of TVL. SKL Exports v. State Tax Officer and Others (W.P. No. 6825 dated March 14, 2024) allowed the writ petition and directed that appeal be accepted by the Department after considering the date of order rejecting refund application, as the relevant date for limitation purpose; for filing of appeal.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Heard Mr. B. Vijay Karthikeyan, learned counsel for the petitioner and Mr. J. K. Jayaselan, learned Government Advocate for the respondent.
2. The Writ Petitions have been filed challenging the order of assessment and the order of rectification passed by the respondent, pertaining to the year 2019-2020 and 2022-2023.
3. The ground raised by the learned counsel for the petitioner is that the show cause notice was vague and he has also relied upon the order of the learned Single Judge of this Court in the case of MD Electric Co Vs State Tax Officer, Chennai, reported in (2024) 17 Centax 348 (Mad.) and contended that this Court had set aside the impugned order of assessment in similar case.
4. A perusal of the said order would show that the order impugned therein was the show cause notice which was found to be vague. In the present case, pursuant to the show cause notice, the petitioner has filed a detailed reply. On consideration of the detailed reply, the impugned order has been passed. The rectification application has been dismissed holding that the grounds raised in the rectification petition are all in the nature of challenging the order of assessment. Further, the challenge in the Writ Petition apart from the vagueness of the show cause notice which had already been held, since had been acted upon by the petitioner, the said claim could not be raised in the present Writ Petition. All other grounds are on the merits of the assessment order. Therefore, it would be proper for the petitioner to approach the appropriate authority.
5. At this juncture, the learned counsel for the petitioner would submit that the appellate authority would insist on calculating the period of limitation from the date when the original assessment order was passed and in such case, the appeal would be much beyond the period of limitation and would apprehend that the appeal would not be entertained as it is being made beyond the period of limitation. After assessment order has been made, Section 161 of the GST Act provides for an application to be made for rectification. Such rectification can be disposed either in favour of the assessee or against him. If any rectification is made as prayed for, the same would get merged into the original order. Just because the rectification application has been rejected, the period of limitation to challenge the original assessment order cannot be said to begin from the date on which the original order was passed, it would only count from the date on which the order of rectification has been passed.
6. In the present case, the original order of assessment was made on 07.08.2024 and the order in rectification was made on 12.11.2024. Therefore, the period of limitation for challenging the order of assessment dated 07.08.2024 shall start ticking from the date of rejection of the rectification application i.e., from 12.11.2024. It is made clear that when the appeal is filed by the assessee as against the original order of assessment, the period of limitation shall be calculated from the date on which the rectification had been dismissed.
7. With the above said liberty, the Writ Petitions are disposed of. No costs. Consequently, connected miscellaneous petitions are closed.
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